So too will our work simplifying rules about reporting. [19]  Growth and competition One of the benefits of tailoring rules to UK circumstances is that it helps to facilitate effective competition in markets we regulate. I see connections between that objective, which we already have, and our new competitiveness and growth objective. That’s because an efficient market is one that allocates resources to their best use, including by ensuring that there aren’t parts of the economy struggling to access finance that they should be able to secure. I don’t want to be too simplistic about it – but in general terms what is good for competition is broadly good for growth. [20] The importance of competition means that we need to act when rules that are proportionate for large firms are not proportionate for small ones. Doing so removes barriers to entry. That is why we have invested in the Strong and Simple project to create a simplified regime for small banks and building societies. Today we are publishing our first set of policy proposals for this simpler regime. These are set out in a Consultation Paper proposing simplifications to liquidity, reporting, and disclosure requirements for banks and building societies that are eligible for the simpler regime. [21] In addition, we are also publishing a Consultation Paper proposing simplifications to remuneration rules for smaller firms. [22] These are changes we could not have made whilst we were in the EU.
Since monetary policy primarily affects the economy through long-term real interest rates, and therefore through agents’ expectations for the future paths of the policy rate and of inflation, the end result would be more accommodative policy during the downturn than recommended under the IT regime. 2  BIS central bankers’ speeches  A more modest proposal was to keep the IT regime, but increase the targeted level of inflation. The crisis and the bubbly period that preceded it convinced many that the modern macroeconomy is more prone to shocks that previously believed, and therefore the 2% target level that prevailed in mature economies before the crisis was perhaps too low to keep the economy from repeatedly hitting the zero lower bound. My take on this debate is that, at the end of the day, inflation targeting emerged even stronger from the crisis. No major central banks abandoned inflation targeting, and some central banks that were not inflation-targeters adopted elements of the framework. There are several reasons for the resilience of the IT regime: •  Central banks found that inflation targets were actually helpful in explaining the need and the room for unconventional policy measures to the general public. •  Furthermore, inflation targets helped anchor inflation expectations, keeping deflation at bay despite the large output gaps prevalent at the height of the crisis. •  The proposed new monetary policy regimes suffer from a number of practical deficiencies. They are too complex for the general public to understand and follow.