this job. strangely enough, it comes from both sides of the debate : • those arguing for looser regulation often claim that prudential regulators have a technocratic focus on eliminating all risk, and fail to see the bigger picture. worse yet, we are sometimes accused of having infected the wider financial sector with a culture of ‘ safetyism ’ as a result, damaging investment and growth. • on the other hand, those arguing for tougher standards often seem to suggest that any crystallised risk – and in particular any failure of a regulated firm – represents a failure of prudential regulation. in response, i would make a number of points. first, if we have really been trying to reduce risks to zero, then we have unambiguously failed. consider these simple points : we run a banking system which is leveraged to a bank of england level of around 20 times ; we have managed the demise of over 20 banks since the pra was created, some very dramatic such as silicon valley bank uk, others managed quietly ; at the same time we have authorised another 38 banks and 28 insurers ; 15 and according to the imf we are the world ’ s largest host jurisdiction to foreign financial firms, not least given the large number of international bank branches we welcome. 16 but more importantly, it is absolutely not the job of prudential regulators to reduce risks to zero. we may have no appetite for causing a financial crisis. but that doesn ’ t mean we have no appetite for risk. risk is the lifeblood of a thriving capitalist economy, fuelling growth and innovation. the whole point of having a strong financial system is to enable society to take risks : by providing capital to promising ( but uncertain ) opportunities, and allowing business and households to pool their risks via insurance and hedging products. 17 our role as regulators is not to eliminate risk, but to ensure risks are properly managed, so that individual failures will not bring down the whole system. a mature debate on prudential regulation needs to recognise this basic fact – though of course people can and do differ on what good risk management looks like. as for “ safetyism ”, i recognise that there is a broader debate to be had about risk appetite in society, and whether we can rely more on caveat emptor especially in wholesale markets. but honestly if parliament puts the word “ safety ” into our primary objectives, then you should expect us to be proud growth - oriented safetyists! the

effective deterrent to reckless behaviour. 9 more precisely : at present the maximum deferral period is seven years for higher - paid senior managers, plus a 6 - 12 month retention period ( which we propose to abolish as part of this reform ). higher - paid senior managers are individuals whose total remuneration exceeds £500, 000, or who earn variable remuneration which exceeds 33 % of their total remuneration. bank of england chart 1 : proposed changes to remuneration rules deferred variable remuneration on which malus could apply each year under different deferral policies ( a ) ( a ) 7 - year deferral currently applies to higher - paid senior managers ; in addition, variable remuneration awarded in the form of instruments is subject to a retention period of up to a year. these proposals will support growth and make our regime more competitive without undermining financial stability. i anticipate a lively reaction to them and look forward to it. moving away from bankers ’ pay, our major recent policy packages have all been tailored for competitiveness and growth. and more widely, we have been looking carefully at the vast corpus of existing regulation – much of which we ’ ve inherited from the eu – to see what opportunities exist to tailor and refine, removing redundant or unnecessary burdens while maintaining safety and soundness. i expect that much of what we will do to deliver our new objective in coming years will be actions which come from looking afresh at rules we ’ ve made over the last decade or so, and asking ourselves whether there are adjustments we can make which would make our regulation more efficient and less burdensome without any negative effect on our primary objectives. 10 this would become an overly long speech if i listed everything we ’ ve done already on this score, which is all set out in our report to parliament. i of course would love to give an enormously long speech but i am fearful of incurring the wrath of the lord mayor so instead i will just touch on a few elements. first, the big policy packages – basel 3. 1 and solvency uk. 10 i should say though, that we are very aware that change for change ’ s sake imposes costs on firms and makes doing international business more difficult. so where we do make adjustments, it will be for good reasons. we have set out our approach to reviewing rules in a policy statement : ps4 / 24 – pra statement on the review of