“Bank of England Financial Policy Committee member Michael Cohrs said the culture and incentives at banks need to change in order avoid systemic problems.
“Ultimately, it is the culture within individual banks and the incentive systems that drive risk taking which need to be changed,” he said in the text of speech delivered March 23 in Edinburgh. “The good news is that I see evidence that banks are changing incentive systems and this will lead to a different culture within the banks which society will prefer.”
The record of the FPC’s March 16 meeting published last week noted that banks have made progress in limiting pay while they build buffers against future shocks, though the panel said they still need to raise more capital. The FPC meets quarterly on an interim basis while legislation on its powers is considered in Parliament.
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