Indeed my first meeting on getting back from summer leave was to review, with Andrew Bailey and other colleagues, our security team’s preparations for an Extinction Rebellion action in the City around the Bank. Some of the protesters seem to believe we are doing nothing much at all, which I do not accept . At the other end of the spectrum, some have argued that central banks have no real role in responding to climate change. This also I disagree with. I think it would be completely non-credible for the PRA, charged with the safety and soundness of banks and insurance companies, to say that climate change and the financial risks it brings should be ignored in its work. I do of course agree that everything we do on climate must be directly rooted in our statutory objectives. But it is essential to acknowledge that banks and insurance companies are exposed to financial risks from climate change. As the prudential regulator, we must understand these risks and ensure they are being well-managed. Moreover, banks and the broader financial sector will play a pivotal role in financing the transition to a 4/5  BIS central bankers' speeches  greener world, helping to mitigate the climate-related risks to the UK financial system and economy. Diversity and inclusion The same applies to our work on diversity and inclusion. It is not the job of the PRA or the wider Bank of England to pursue social policy – that is a matter for politicians. But we should do two things.
This will entail: 2/5  BIS central bankers' speeches  further developing our approach to wind-down and run-off planning, so that we and the firms we supervise have the capabilities in place to execute a safe and orderly exit should they enter distress; building this in a proportionate way into BAU supervisory activity and tools, potentially using skilled person reports where needed; and looking at whether there is scope to reform any aspects of the protection framework of the financial services compensation scheme (FSCS) to ensure that depositors and policyholders are appropriately protected in insolvency, and paid out in a timely fashion. To avoid creating excessive alarm from those of you eyeing the prudentist as she considers this new form of intervention, the instruction manual does not contain any of: more capital; bail-in debt/MREL; or their close cousin, root canal surgery. Nor do we necessarily expect more exits than we have had in the past. It is our hope that through time this shift in our approach will reduce the risk of disorderly exits in the small and mid-sized population, and support a competitive and dynamic marketplace while increasing the effectiveness of our supervision. Rule-maker The other major area in which we need to update the PRA’s own operating model is to accommodate the change in our role following Brexit. “Take back control” is a big deal in financial services, given the amount of regulation we have and the large extent to which it has come from or via the EU in recent decades.