level of roughly 13 percent, and estimates suggest that only a quarter of total household debt is exposed to rising interest rates in the near term. net credit growth to emerging markets has been moderate relative to past periods. growth in commercial bank assets has picked up a bit in recent quarters, but remains significantly below the pace of the second half of the 1990s. as the financial markets have built in expectations of a gradual rise in the fed funds rate over the next two years, financial institutions have had some time to position themselves for an environment of higher interest rates and volatility. there have been adjustments in credit spreads and other risk assets, which in some areas had fallen to historically low levels, but these reversals have been tempered by what it still overall a favorable view of corporate credit fundamentals. and it is worth drawing attention to the fact that the average duration of the mortgage market has increased significantly over the last nine months to the point where the amount of hedging pressure on interest rates related to extension risk is likely to be contained even as interest rates rise. the fact that these adjustments have begun ahead of any change in monetary policy probably will help diminish the strains in the financial system that might otherwise be expected to accompany this type of transition. even so, risk managers need to be attentive to, and react appropriately to, the pressures that could emerge following this extended period of low interest rates and a steep yield curve. the agenda for the supervisory community remains dominated by the following broad priorities : • we are moving ahead with basle ii to bring a more sophisticated assessment of capital adequacy and risk management techniques to the supervisory framework. • our ongoing supervisory examinations continue to concentrate on strengthening the internal management and control infrastructure across the various dimensions of risk management and compliance. • we are supporting the important efforts underway to better align u. s. and international accounting standards and to improve the quality and integrity of public disclosure. • we are working to encourage firms to proceed with their investments in greater resilience and geographic range called for in the interagency paper on sound practices to strengthen the resilience of the u. s. financial system. • we continue to encourage efforts to strengthen all aspects of our national payments and settlement systems. • and we are engaged across a number of fronts internationally to provide a more integrated framework of supervision that better matches the integration of national financial systems and the increased global reach of the largest financial institutions. as part of our supervisory process we monitor closely the

that is a fairly high bar. in practice this is likely to mean that we put more emphasis on operational resilience for larger firms doing activity whose disruption could have a financial stability impact. for smaller firms we are only strongly interested where something is going on that is big enough to threaten the firm ’ s safety and soundness. so for example : if you are a big bank you can expect us to take an interest in your ability to process payments ; if you are an insurer with a large annuity book, we will want to know what the operational risks are to your ability to supply people ’ s retirement income ; and if you are a smaller firm spending huge sums on a all speeches are available online at www. bankofengland. co. uk / speeches major it project, we will be interested in that. across all of these, we will also want to dig into systemic risks – most obviously those associated with cyber - attacks and the risks associated with a heavy concentration of activity across firms with a handful of outsourcers. but there is also a much wider set of more day - to - day operational issues and problems which arise for firms, and given the increasing importance of digital service delivery firms need to get much better at this. sometimes these issues will engage the fca ’ s objectives, which will be a judgement for andrew and his team. but in general, they will only be a priority for the pra if they meet the criteria i have just mentioned. with sufficient but limited resource we need to focus our efforts where they can have the biggest impact in terms of advancing our statutory objectives. brexit now lord mayor, i admit that i am very tempted to conclude this speech without a mention of the b - word, not least because this would surely guarantee a speech shorter than andrew ’ s. but our philosophy on brexit issues happens to illustrate the point i am making here about shared endeavours. because getting from a to b on brexit is very much a shared endeavour, although let ’ s be honest it doesn ’ t always feel like that! of course there are some debates between us and firms as they restructure, in particular where we see structures that appear overly complex or lacking in proper accountability. but in general this is not a battleground where the incentives of regulator and regulated are inherently in tension : we all want as smooth a transition as possible, and to reduce cliff - edge risks as best we can. actions speak louder than