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2021 INTRODUCTION | Accountability for Outcomes

2021 INTRODUCTION | Accountability for Outcomes

by Starling Insights

Starling Insights Editorial Board

May 17, 2021

Compendium

“For natural reasons, firms and policy makers often prefer hard and fast rules,” writes Chris Woolard, past Acting-CEO at the UK Financial Conduct Authority. [See also in the article Outcomes Based Regulation] For regulated entities, “this offers the sense that ‘I complied with the rule, so I must be safe’ while, for regulators, rules provide clear evidence that they are trying to manage a situation,” Woolard explains. “But they [rules] need to be subordinate to the overall purpose the rules intend to serve.” It is not clear that such purposes are being well met. 

The future of supervision was a central theme at the 21st International Conference of Banking Supervisors in October last year. “The world has changed profoundly since the outbreak of COVID-19 seven months ago,” observed Pablo Hernández de Cos, Chair of the Basel Committee on Banking Supervision and Governor of the Bank of Spain, in his keynote speech. “The uniqueness of the sudden stop to the global economy in response to the tragic health crisis is only matched by the sheer uncertainty about the outlook. To borrow a sports metaphor, we still do not know if we are in the first inning, quarter or half of this crisis. Uncertainty is the only certainty there is.”1This requires that we ask whether banking supervision will be “fit for purpose in the new normal environment after the pandemic.” [See also in the article Fit  for Purpose?]

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