But the SMR is not an end in itself – the accountability it delivers should contribute to safety and soundness. Firms should therefore expect us to make more use of the SMR to deliver supervisory priorities. There is no magic to this: we will simply ask, when we set out those priorities, which senior manager is on the hook to deliver them, and what will happen if they do not? We want to know who is on the hook if things go badly wrong, and have recently asked firms to spell this out in developing areas such a crypto-assets, operational resilience and algo-trading. And enforcement cases have shown that we can, and will, take action against Senior Managers if our red lines are crossed. However, we are not an enforcement-led regulator: in my opinion, the real prudential value of the regime lies in creating opportunities for preventative or remedial action through supervision. Which brings me to my third example: pay. This has been another area of massive reform. No pay system is perfect, but I remain convinced that the 100% cash, paid out up-front bonus systems which existed for risk-takers in some of our largest firms before the crisis were an important part of what broke the financial system. The new system of deferral, malus and clawback is much safer. So we are not planning to come up with some new approach at this stage – seven year deferral is long enough, and has a pleasingly biblical ring to it.
And that would generate risk premia and additional volatility in financial markets. The challenge in achieving price stability Implementing a symmetric mandate in current circumstances is not an easy task. I see three challenges in the current situation First, in finding the optimal mix of non-conventional instruments. Central Banks in general, and the ECB in particular, have been quite innovative. New methods of forward guidance have been developed that have proved very efficient in the euro area in bringing down the short end of the yield curve. The main question, in my mind, concerns the best combination of the other  2  BIS central bankers’ speeches  instruments: negative deposit rates and asset purchases. There is no certainty that they can be implemented together in a consistent way. Asset purchases are expected to act both through changes in asset prices and a flattening of the yield curve. They inject central bank liquidity that forces banks to hold excess reserves in significant amounts. However, the negative rates create a sort of tax on those reserves. The apparent rationale is that negative rates would push banks to grant new loans or buy assets, therefore reinforcing the impact of asset purchases. But since loans create deposits, and the sellers of assets receive liquidity that they need to deposit on bank accounts too, there is simply no way this liquidity can disappear until the central bank decides to withdraw it.