delirious excitement. there was, however, an outbreak of delirium within the pra – which i can assure you is an exceedingly rare event, in part due to the dour leadership style i try to affect. the reason for this was the government ’ s view that “ the most effective way to [ implement these regulations ] is to delegate responsibility for the implementation of firm requirements to the regulators, subject to an enhanced accountability framework. this means that the vast majority of the updated banking regime will be implemented in pra rules. ” in short, for implementing this set of basel rules the government proposes to move back to a more british style of regulation, with the rules made by regulators rather than set out in law. this is quite different from the eu approach, where a huge volume of detail is locked down in law because that is the only practicable way to ensure that 27 countries do the same thing. absent that imperative, it makes much more sense to have these details in regulators ’ rules, as most other countries do, so that we can keep pace with developments in financial markets and adapt the rules as needed – subject, of course, to us being fully accountable to parliament for our actions. now this may sound rather boring. indeed, to everyone apart from me and the pra policy team it is rather boring! so boring in fact that when i gave an inordinately long speech on this topic i went all the way to switzerland so that i could inflict it on their bankers rather than all of you – had i done otherwise i am sure the lord mayor would finally have banned me from speaking at this event. but this is a very, very important issue for financial services in the uk because it is the fundamental bedrock of increased dynamism in our all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice regulation. i am delighted therefore that this is the approach the government has proposed in its consultation on the future regulatory framework, and i hope that it will be taken forward as the wider regime develops. graduation at this point i fear that the chair whom i annoyed so much last year is becoming restive again, fearing a long lecture on regulatory plumbing. so let me stick with dynamism, but move us on to something a little more tasty that we have been cooking up in the pra kitchen. we made changes to simplify the credit union regime last year

. our findings suggest that these metrics are not as well - suited to identifying small banks that are headed for trouble. source : bank of england and bank calculations. notes : for a description of the methodology, see david aikman, andrew g haldane, marc hinterschweiger and sujit kapadia, ‘ rethinking financial stability ’, boe staff working paper 712 ( 2018 ) ; and marcus buckman, paula gallego marquez, mariana gimpelewicz, katie rismanchi, sujit kapadia, ‘ the more the merrier? evidence from the global financial crisis on the value of multiple requirements in bank regulation ’, boe staff working paper ( forthcoming ). balance sheet data is from historical regulatory returns ( see sebastian j a de - ramon, william b francis and kristoffer milonas, ‘ an overview of the uk banking sector since the basel accord : insights from a new regulatory database ’, boe staff working paper no. 652 ( 2017 ) ). ‘ large ’ means total assets of £5bn or above. distress is defined as receiving worst possible supervisory rating between july 2007 and december 2008, or any instance of default, receipt of state aid, or merger with or acquisition by another bank under stressed conditions during the same period. data on supervisory ratings is from historic fsa records ( see joel suss and henry treitel, ‘ predicting bank distress in the uk with machine learning ’, boe staff working paper no. 831 ( 2019 ) ). 12 see david aikman, andrew g haldane, marc hinterschweiger and sujit kapadia, ‘ rethinking financial stability ’, boe staff working paper 712 ( 2018 ) ; and marcus buckman, paula gallego marquez, mariana gimpelewicz, katie rismanchi, sujit kapadia, ‘ the more the merrier? evidence from the global financial crisis on the value of multiple requirements in bank regulation ’, boe staff working paper ( forthcoming ). all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice figure 1b : improvement in performance after adding governance scores figure 1a naturally led us to ask whether there are other measures which can better anticipate problems at smaller banks and building societies. we know that the quality of governance is vitally important, so we repeated our experiment, adding