In the UK, we have a strong flow of defined benefit pension liabilities to insurers, which provides a further incentive to ensure the regulatory regime can facilitate productive investments within the bounds of appropriate risk management of those funds. But what is ‘productive investment’? If we completed a survey here today, I expect we could easily receive a different answer from each attendee in the room, and I won’t claim to have the best. However, here’s one prepared earlier: ‘investment(s)… that have the potential to expand the productive capacity of the economy, while also generating marginal returns to society that exceed  Page 4  the marginal cost of that investment to society’[6]. This was the definition used in the terms of reference of the Productive Finance Working Group, which comprised representatives of industry, HM Treasury, the Bank of England, and the Financial Conduct Authority (FCA). Examples given in those terms of reference include: plant and equipment; research and development; technologies and infrastructure. That working group’s report focussed on the role that Defined Contribution pension funds could play. But long-term and illiquid productive investments could be a natural match to life insurers’ long term, predictable liabilities - in particular pension annuities, which commonly reside in matching adjustment (MA) portfolios. Given the long-term guaranteed nature of these liabilities, and the cost of shareholder capital to support this business, it is natural that insurers’ investment risk appetite will be reasonably low in these portfolios – and this indeed has long been the case for annuity books.

Both processes throw up a peculiar, and quite perplexing challenge: how to present our work and achievements in terms that are comprehensible and acceptable to the many non-specialists on our boards, and to the multitude of non-specialists among the general public. Because of the business background of many board members, and because of the natural human desire for clarity and simplicity, this increasingly boils down to a quest for setting down specific, quantifiable targets by which our performance can be measured. This presents enormous difficulties, even in policy areas that might seem easily amenable to quantification. And the challenges become still more complex when performance is linked to pay. The same problems of clarity and simplicity arise in the operation of transparency, an issue closely linked to accountability, and something which has, I believe, suffused all of the discussions these last few days. There has been a shift in the approach to this subject in recent years, from a broad assumption of confidentiality, except where exceptions can be justified, to something approaching the opposite: transparency and openness in all things except where market or commercial sensitivity, personal privacy or the public interest require otherwise. This is a healthy development. But it is also something that has been forced on many of us by financial or political crisis - through the sudden and often painful realisation that our actions have been inadequately explained, misrepresented and misunderstood. Central banks have been quick to learn from these episodes.