but i took the hint about what he hoped i ’ d cover. let me first remind you that we have already made a significant down - payment in this area. credit union attendees here today will know that in 2019 we implemented a radical simplification of credit union capital requirements. this aimed to remove barriers to growth while delivering greater resilience for smaller credit unions. it was an example of how regulatory simplification can promote both our primary objective of safety and soundness, as well as our secondary competition objective. having left the eu and acquired more regulatory flexibility, we have now turned our attention to a simpler prudential framework for the next layer up of our deposit - takers – small banks and building societies. last week we published a discussion paper1 on this topic, which my colleague vicky saporta also covered in a speech2. now, i would be the first to admit that our papers can often be a little dry, an acquired but necessary taste for those who decide to pursue their careers within the sectors we regulate. but this particular paper is a cracker! over 57 pages the paper explores different options for developing a simpler but resilient prudential framework for small banks and building societies. designing such a framework for small firms is no small feat : there are numerous ways one can do it, all of which involve trade - offs. this is why we have decided first to seek views from you and others through an open discussion paper, rather than consulting on one proposed way forward. so, if you have not done so already, i strongly encourage you to have a look at our paper, perhaps with a glass of wine or a strong coffee to fortify you, and then send in your thoughts – but let me give you a small taster of what is in there. there are three key trade - offs we will need to confront when thinking about how to design a strong and simple framework. the first is the scope of the framework. systemic firms will be outside the framework, but by any measure when looking at uk firms this still leaves us with a set of more than 100 firms, whose total assets range from c. £20 million to c. £90 billion. where we draw the line within that for being in scope of this initial first step of the strong and simple framework will impact the extent of simplification we can achieve while maintaining strong standards. there is also the risk that simplifying requirements for smaller firms could increase barriers to growth, if

need to adjust would in turn depend on what requirements had been removed, what if any requirements had replaced them, and what requirements had remained in place. so, as you can see, designing a simpler framework is not a simple task! our discussion paper elaborates on all these choices, and i hope to have whetted your appetite to get involved in the discussion by responding to our paper. leverage ratio and mrel reviews next, i want to move on to something a bit more relevant in the shorter - term to some of the larger bsa members with us today – the links between the leverage ratio and mrel reviews. i am conscious that at the moment this may be relevant to only a handful of you, so in case you are still listening to my speech i will aim to be brief. the prudential regulation committee and the financial policy committee are conducting a review of the uk leverage ratio framework in light of the now - finalised international standards. 3 at the same time, the bank, as resolution authority, is conducting a review of its mrel framework and how it applies to mid - tier firms. 4 as many of you know, this alignment of timings is not coincidental as the two are closely linked. how so? at first look, one link is through the calibration of mrel. for firms subject to bail - in resolution strategies, mrel is calibrated as twice the applicable minimum requirements set by the pra. so if a firm is subject to a minimum leverage ratio requirement, this will typically be doubled - up in their mrel. but the two are linked in another way, which gives this doubling - up an additional significance. both the leverage ratio and the calibration of mrel are not intended to focus on the riskiness of a firm ’ s balance sheet. the leverage ratio is a relatively simple metric of capital over a firm ’ s total 3 / 5 bis central bankers'speeches exposures, and in this way it acts as a guardrail against uncertainties in the measurement of risk, which – from bitter experience of the problems which can sometimes arise from risk - weighting – i consider very important. as a backstop to the system, the mrel calibration focuses heavily on the potential impact of a failure, rather than the likelihood of the failure. this is in line with the resolution authority ’ s objectives and mandate. it is not surprising then that when you combine the two, the resulting capital requirements may