Conclusion In my remarks, I have outlined that to “future-proof’’ compliance, we must change the way we think about the subject. I also emphasised that a narrow focus on rule setting and micro managing would likely fail. 3/4  BIS central bankers' speeches  Instead, compliance needs deep understanding. It needs to consider incentives, ethics and professional conduct. It needs to leverage on mutually reinforcing partnerships. It needs to fulfil its responsibility to contribute to the well-being of society. After all, compliance is an enabler, it is not the end outcome that we seek. This is how we should future-proof our financial system and compliance. On that note, I wish all of you a productive conference. 4/4  BIS central bankers' speeches
And in response, the Bank of England had to intervene on financial stability grounds through temporary purchases of long-dated UK government bonds. While these new risks and vulnerabilities are evident, the non-bank financial sector has remained largely stable in recent months, despite the stress in the banking sector that emerged in March. Fund investors shifted their exposure from higher to lower risk assets, especially from high-yield corporate to government bond funds. Portfolio de-risking has also been evident in insurance corporations and pension funds, as higher interest rates have reduced incentives for the non-bank financial sector to search for yield. But there are no grounds for complacency here. Structural vulnerabilities from liquidity mismatches and leverage remain elevated despite recent de-risking. Moreover, bank and non-bank financial institutions can be closely interconnected through funding channels, ownership linkages and common risk exposures. The non-bank financial sector remains particularly exposed to asset price corrections and credit risk should corporate sector fundamentals deteriorate substantially. In addition, non-banks’ exposure to property markets has increased markedly in recent years, rendering institutions vulnerable to ongoing price corrections in real estate markets. Fragile risk sentiment and elevated vulnerabilities in parts of the non-bank financial sector could amplify negative shocks. Strengthening the resilience of non-bank financial intermediation Given the vulnerabilities in the non-bank financial sector, it is vital to further enhance its resilience, also from a systemic perspective. To date, the macroprudential policy framework has mainly focused on the banking sector, while the policy framework for non-bank financial institutions still needs to be enhanced.