6  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  6  To address the “rolling bad apples” problem, mechanisms are now in place in the UK to ensure that when individuals move on their history will be known to those who consider hiring them. The FSB is now considering whether to adopt such an approach more broadly. UK authorities have used their convening powers to encourage market participants to establish standards of market practice that are well understood, widely followed and, crucially, that keep pace with market developments. That’s why the global FICC Market Standards Board is establishing readily understood standards for their markets. And it’s why global FX Committees will launch in May the first consistent code of conduct for FX markets. The best in the markets are codifying the best of markets. But codes are of little use if nobody reads, follows, or enforces them. This is where the UK’s Senior Managers Regime (SMR) for senior decision-makers of banks, building societies and major investment firms comes in. The SMR addresses the common refrain of senior management that they weren’t aware that misconduct was taking place in their firms. The SMR re-establishes the link between seniority and accountability. Senior Managers now must take reasonable steps (including training or proper oversight) to prevent or stop regulatory breaches in their areas of responsibility. Adoption is spreading. Some international firms are voluntarily adopting elements of the SMR’s certification requirements to strengthen their global operations. And the FSB is now reviewing the merits of such “responsibility mapping”.

The Riksbank must take asset prices into consideration to the extent that they affect price stability or financial stability. These are the areas that the Riksbank is responsible for. The inflation target can be threatened if asset prices lead to households and businesses increasing their demand so much that the use of resources in the economy exceeds potential growth. At present, the use of resources in the Swedish economy is still low which creates space for a time for a higher increase in demand than would be sustainable in the long term. There is accordingly space for the stimulation that increasing share and property prices create and which is inter alia reflected in increased indebtedness in the household sector. In a somewhat longer perspective, however, household debts probably cannot increase at the rate we see today without this indicating a growth in consumption that is higher than permitted by the inflation target. The effect of asset prices on demand and inflationary pressure is, however, only one of many factors that affect the assessment of inflation and the conduct of monetary policy. This also applies for the assessment of financial stability. In general, it is moreover probably hardly possible or advisable to attempt to dampen an increase in share and property prices by monetary policy, even though it is possible to conceive of situations where the Riksbank would want to be able to do so on some future occasion, eg with a view to avoiding the risk of recession and falling prices.