imagine, as an extreme example of a focused approach, a regime based on a single risk - insensitive capital requirement. that would be very simple, but the requirement would probably have to be set very high to satisfy us that it provided the same level of resilience as the current regime. a streamlined approach, on the other hand, might include simpler versions of current pillar 1 and pillar 2a risk weighted capital requirements with broadly the same calibrations as are applied today. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice we therefore face a trade - off between simplicity and calibration. a focused approach would impose the fewest requirements, but those that were applied might have to be conservatively calibrated in order to maintain resilience. a streamlined approach would lead to less conservatively calibrated, but more complex requirements, when compared to the focused approach. figure 1 illustrates this trade - off, along with a second trade - off between simplicity and minimising barriers to growth. this second trade - off arises because a focused approach would be very different to the requirements a growing firm would face after it moved out of the simpler regime. it might therefore be more difficult for a small firm to grow out of a focused regime, as it would effectively have to gear up to meet a whole new set of requirements. figure 1 : illustration of the characteristics of a ‘ focused ’ and a ‘ streamlined ’ approach in practice, there are a spectrum of approaches we can take between the extreme cases of a very focused approach which is like the requirements we have in place for credit unions, and a slightly streamlined approach which is almost the same as requirements for larger banks and building societies. and different approaches might work better for different sorts of requirements. for example, the right approach for capital requirements might differ from the right approach for liquidity requirements. what this way of describing different approaches provides us with is clarification of the choices and trade - offs we face. the discussion paper asks for your views about how these trade - offs should be managed. if a fully focused approach based on a very small number of conservatively calibrated requirements represents one extreme, all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice and a modestly streamlined approach which trims a few elements from the current rulebook represents another,

of the economy, there is little evidence as yet in the overall productivity data that would suggest an imminent, abnormal, pick - up in the underlying rate of capacity output growth such as they have seen in the us, however fervently we might hope to become infected by what is happening there! now none of this means that we have closed our minds to the possibility of a more benign relationship between the demand and supply sides of the economy, which would allow us to sustain for a time stronger growth consistently with meeting our inflation target. but we can ’ t afford to bet the bank on that happy state of affairs either. when people approach me with the sound - bite “ give growth a chance ” what i hear them saying is “ take a risk with inflation ”. but equally when they say “ you must take no risks with inflation ” i hear them saying “ the world will never change ”. the truth is that nobody knows with any great confidence. the important thing is to keep an open mind and to monitor intensively all of the data as it becomes available to us, and draw what inferences we can as to how those data affect the balance of risks around the inflation target looking ahead. what is encouraging, mr chairman, is that for all these uncertainties and complications the broad prospect for the uk economy - including the scottish economy - over the next couple of years is for continuing relatively strong growth, with continuing relatively high employment, and continuing relatively low inflation. the monetary policy debate is a narrow one, it is about just how strong the growth, just how high the employment and just how low the rate of inflation. it ’ s a very long time since any of us could describe the debate in that way with any degree of confidence.