the regulatory foundations of international competitiveness and growth − speech by vicky saporta given at the bank of england published on 27 february 2023 in her speech ‘ the regulatory foundations of international competitiveness and growth ’, vicky saporta talks about what a new secondary competitiveness and growth objective will mean for how the pra makes rules. speech introduction parliament is debating a financial services and markets bill that will redefine the pra ’ s powers and responsibilities. the bill would give the pra a new secondary objective. this will require us to act when we can to facilitate the uk economy ’ s international competitiveness and its growth over the medium to long term, subject to alignment with international standards. let me be clear. i – and the pra as a whole – know that this is a very important change. i ’ m going to talk today about what this change will mean for how the pra makes rules. it ’ s easy for me to sum that up. this is a big deal. it will make a big difference. we take the new objective seriously. we will make rules differently as a result. let me tell you how. i ’ ll start by sharing my ideas about how the financial sector supports competitiveness and growth, and about how good prudential regulation provides foundations for success. i will then tell you what the pra will do to strengthen those foundations. our plan is to deliver responsible openness that harnesses the uk ’ s strengths as a global financial centre. we will tailor rules to uk circumstances when that is appropriate and when we can do so in ways that maintain trust. we are working hard to deliver this plan. that is why i am able to use this occasion to announce the publication of two consultation papers proposing tailored liquidity, disclosure, reporting and remuneration rules for small banks and building societies. these proposals show how we can use our rule making powers in ways that are good for competitiveness and growth. we are also today publishing analysis of the impacts of previously announced proposals. this analysis is about how our proposals will narrow the gap between capital requirements faced by large and small mortgage lenders. this analysis will feed into policy development work to simplify capital requirements for smaller banks and building societies. i ’ ll conclude by launching a conference we will hold in september to deepen our understanding of the links between prudential regulation, international competitiveness, and growth. at that conference we will share ideas about how we can provide information ( including

for capital requirements for exposures to smes. in general, we will always listen to arguments when people disagree with us, and we will always take into account new evidence. this includes tailoring rules that are already in place in response to our own evaluations or to evidence from industry, broader civil society and other stakeholders. this is what we did when we implemented an earlier basel regulatory package known as crr2. in that case, we implemented a new standard for banks ’ long term funding after tailoring it to be more risk sensitive for activities that are important for the uk. that was a change we made in response to evidence - based arguments we received during the consultation. we are now taking the same approach to work on solvency ii rules for insurers. debates between us and the government have got a lot of public attention. but there are many areas where we fully agree about the benefits from simplifying the regime to better reflect the needs of the uk. and with the high - level policy decisions now clear, we are focused on implementation and on delivering detailed proposals for consultation. my colleague sam woods recently set out what we are committed to doing. all of this will be on top of what we are already doing to remove unnecessary rules we inherited from our time in the eu. we have so far deleted 13 guidelines issued by eu regulators, five superseded supervisory statements and 26 technical standards onshored from the eu. this work will continue. so too will our work simplifying rules about reporting. growth and competition one of the benefits of tailoring rules to uk circumstances is that it helps to facilitate effective competition in markets we regulate. i see connections between that objective, which we already have, and our new competitiveness and growth objective. that ’ s because an efficient market is one that allocates resources to their best use, including by ensuring that there aren ’ t parts of the economy struggling to access finance that they should be able to secure. i don ’ t want to be too simplistic about it – but in general terms what is good for competition is broadly good for growth. the importance of competition means that we need to act when rules that are proportionate for large firms are not proportionate for small ones. doing so removes barriers to entry. that is why we have invested in the strong and simple project to create a simplified regime for small banks and building societies. today we are publishing our first set of policy proposals for this simpler regime. these are set