From ‘ethical drift’ to ‘ethical lift’: Reversing the tide of misconduct in global financial markets Remarks given by Minouche Shafik, Deputy Governor, Markets and Banking  Panel Discussion at the Federal Reserve Bank of New York Conference on ‘Reforming Culture and Behaviour in the Financial Services Industry’ 20 October 2016  1  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  Introduction  Misconduct in financial markets has existed for as long as commerce has existed. Thousands of years ago, 1  Chinese merchants found ways to hide trading profits through a variety of financial techniques . From the great South Sea bubble in the 1720’s to the mis-selling of railway stocks in the mid-1800’s through to more recent events such as the collapse of Bank of Credit and Commerce International and the failure of Barings in the mid-90’s – we have had a long and inglorious record of rogues, fraudsters and embezzlers in the financial services sector. But the wave of misconduct which has emerged in the aftermath of the financial crisis suggests that “this time is different.” The magnitude of the misconduct fines is indicative of the scale of the problem: since 2  2009, UK banks have paid almost £ billion in fines and redress costs, roughly equivalent to the private capital they have raised in the same period.
At this juncture, the transparency of the process is fundamental through the detailed explanations of the actions and of the context in which the decisions were taken. Following the purposes of the inflation-targeting regime, the timely release of the Monetary Policy Committee minutes provides the public with the Committee’s view on the economy and its prospects, providing the rationale for the policy adopted by the Copom. (At the same time, contact with analysts from several segments of the public was enhanced by the creation, especially for this purpose, of an Institutional Communications Group, which allows a more efficient two-way communication through the use of surveys of expectations and other specific research.) The production of reports and the release of studies and research is also fundamental aiming at increasing the transparency of the Bank's activities to the public. In addition to the monthly bulletins and annual reports, other key reports are the Inflation Report, which deals with the inflation-targeting framework, the Financial Stability Report, which deals with the stability of the Brazilian Financial System, the Banking Economics and Credit Report, development of the Interest Rates and Banking Spread Project, the Working Papers Series and the Technical Notes Series of the Central Bank. Thus, the Central Bank will emphasize not only the improvement of statistics and models, but also its transparency and communication. For instance, the increase of information and data available to the public on the Central Bank website has been outstanding. More than eight thousand statistical series are already available, with increasingly easy access.