Good morning and thank you for giving me this opportunity to speak on the subject of bank capital adequacy. I am going to focus on the design of the capital adequacy regime. I am going to draw out the failings of the old regime and why those failings were so critical, comment on the major progress made over recent years, and use all of this to draw out design questions that remain to be settled. In doing so, I will examine a set of key objectives of the regime: first, that it creates good incentives for the behaviour of regulated firms; second, that it is appropriately forward-looking – at the risks in the future; and third, that it encourages and requires appropriate transparency which fosters market discipline.
Speech given by Andrew Bailey at Bloomberg, London.
Speech (100KB)