In a recent hearing before the UK House of Lords Financial Services Regulation Committee, Sam Woods, Deputy Governor for Prudential Regulation at the Bank of England, announced plans to ease the regulatory burden on firms, as reported by the Financial Times.
Woods, who also serves as the CEO of the Prudential Regulation Authority (PRA), emphasized that financial stability and economic growth "go hand in hand." As such, the BOE and the PRA are analyzing where they can soften requirements for banks and insurers to support economic growth without sacrificing financial stability.
The changes align with UK Prime Minister Sir Keir Starmer's push to streamline regulations for growth. While there is industry and political pressure to relax rules further, Woods cautioned against going too far in this direction. "I do think we should avoid a race to the bottom," he warned. “But I don't think that is what parliament has asked us to do.”
The regulator's secondary objective to support growth and competitiveness, which was put in place by the previous government, has already brought "a very significant change in what we are doing and in the organisation," Woods said. However, there remain open questions as to how regulators can best achieve a balance between growth and stability. "Where is the right place to draw that line? We are making those judgments constantly," Woods explained.
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