Building strong and simple: the first step Speech given by Victoria Saporta, Executive Director of Prudential Policy Bank of England Virtual Webinar 29 April 2021  I would like to thank Austen Saunders and James Thatcher for helping me write this speech and David Bailey, Sarah Breeden and Sam Woods for helpful comments. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  Last year, I set out my views on the ideal framework of post-Brexit prudential regulation in the UK. I outlined the key features that this prudential framework should exhibit. That it should be legitimate and democratically accountable, that it should have time-consistency embedded within it, and that it should adapt to changing circumstances whilst upholding prudential standards.1 I concluded that the framework which best embodies these features is one where policy is made by an independent regulatory body, with a clear mandate, and robust accountability mechanisms, in particular to Parliament. I am therefore pleased that this was the model consulted on in HMT’s Regulatory Framework Review last October. Of course the legislative process still needs to be completed. But we at the PRA must prepare in anticipation of the enhanced role we are set to play in this post-Brexit world. I would like to use this speech to sketch a vision for our updated approach to policymaking, before devoting the majority of my time to giving detail on a key upcoming policy initiative – the so-called ‘Strong and Simple’ framework for small banks and building societies.

The implementation of quick and concrete measures, which guarantee the long-term stability of public debt, seems that shall condition considerably the future development. World financial markets have reacted tensely against these developments, being characterised by a high volatility and an increase of risk primes throughout the instruments variety, markets and financial agents. Turning to the domestic economy, the latest qualitative and quantitative indicators show a slow performance of economy in the early months of 2010. The deceleration of domestic demand is compensated by a positive and growing performance of the Albanian exports. The domestic inflationary pressures were low and the consumer price inflation declining. Monetary markets revealed more calm, characterised by a dropping trend of interest rates, liquidity situation improvement of the banking system and a more stable performance of the exchange rate. However, lending to economy continues to maintain low growth paces. Indirect and prior estimates suggest that the paces of private consumption have been controlled, conditioned by restricted sources of its financing and by the higher tendency of consumers regarding savings. The low level of capacities utilisation in economy, the low paces of loan for investments and the fall of capital and intermediate goods import, signal a contraction of private investments even during the first three months of this year. The demand for monetary assets of private sector continues to be low, thus reflecting a deceleration of the economic activity. The annual pace of lending growth, excluding the exchange rate effect, for this sector slowed down onwards, at 4.8 percent in March.