In a recent interview with The Times, Sam Woods, CEO of the UK Prudential Regulation Authority (PRA), explained why the PRA is learning to embrace risk in its pursuit of economic growth.
A keen windsurfer, Woods took up wing foiling at 50, braving storms despite warnings of insanity. This appetite for risk in his personal life aligns with Chancellor Rachel Reeves' push for regulatory reform to boost economic growth. "We are very clearly at a turning point," Woods said. "We're significantly pruning the trees but we're not going to set fire to the forest."
Since the 2007–09 financial crisis, regulation has tightened. But now, with a new secondary objective to promote growth and competitiveness, the PRA is reviewing its rules to reduce burdens on businesses. The authority has already scrapped the EU-inherited cap on bankers' bonuses and is considering lowering banks' data reporting requirements.
"I don't think there's anything that we are currently doing that seems very likely to sow the seeds of the next crisis," Woods insisted, despite some critics expressing concern that loosening rules will cause more problems down the road. However, he identified emerging risks in "shadow banking," cybersecurity, and the uncertain future of Basel 3.1 reforms, particularly if the US eschews the global standard.
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