This bears emphasising because in recent years a host of issues have been laid at the door of the Bank of England from housing affordability to poor productivity. Calls for the Bank to solve these challenges ignore the Bank’s carefully defined objectives. And they confuse independence with omnipotence. 4  All speeches are available online at www.bankofengland.co.uk/speeches  4  Monetary and financial stability are foundational. They are necessary for prosperity but they aren’t sufficient to deliver it. The biggest determinants of the UK’s medium-term prosperity will be the country’s new relationship with the EU and the reforms it catalyses. Most of the necessary adjustments are real in nature and therefore not in the gift of central bankers. The Bank will do everything it can to support adjustment consistent with its statutory obligations. We will continue to assess and express our independent assessment of the risks associated with Brexit. We will also use all our powers, consistent with our remits, to mitigate those risks and to smooth the adjustment to new opportunities. Monetary policy will be set to achieve the inflation target in a way that helps smooth real adjustment in the economy and supports jobs in the wake of very large external forces. Banks will be capitalised so that they can withstand any severe shock that could be associated with Brexit – however unlikely – and still meet demand for credit. The financial system as a whole will have the capacity to finance the transition and the opportunities beyond.

The focus has been on the efficacy of policy instruments needed to preserve financial stability, the structure and design of decision making frameworks and the institutional arrangements and accountabilities in regard to financial stability policies. An important part of this is that, with the accountabilities, is the need to have broad range of instruments and the policy space and flexibilities to achieve the specific financial stability policy objectives. In addition to this, for many emerging economies, an important mandate is also to develop the financial system. For most Central Banks in emerging economies, this developmental role is integral to maintaining the orderly development of the financial system and hence financial stability over the longer term. Intensified supervision and strengthened governance The global financial crisis has also prompted a renewal and further strengthening of supervisory approaches, and intensified efforts to deepen supervisory cooperation across borders. This reflects the growing significance of internationally and regionally active financial institutions. Although the risk based supervisory approach is already adopted in many countries and provides the framework for enhanced risk assessments with more informed supervisory judgments, the methods used to determine supervisory intensity may need to be regularly re examined given the continuous pace of financial innovation and changing market conditions. As more jurisdictions move to adopt more principle or outcome based approaches to regulation, ensuring rigorous and proportionate supervision, will become increasingly 2  BIS central bankers’ speeches  important to ensure prudent risk taking in the financial system.