At this stage, it is impossible not to agree with President Trichet, in this statement: “The undesirable social and economic consequences of inflation, namely inefficient allocation of resources, high levels of interest rates, the regressive inflation tax, arbitrary redistribution of income and wealth to the detriment of the most vulnerable, and, last but not least, economic instability, lower growth and lower job creation, are the benchmarks against which one has to assess the social benefits of price stability. This is why a credible commitment to maintaining price stability is so important for the living standards of European citizens.” 1 Together with its independence, the Central Bank of Turkey was set to be accountable in various ways. In this sense, according to Article 42 of the Law on the Central Bank of Turkey, we are accountable to communicate with the Government and with the public if inflation deviates excessively from the target, or even a possibility of deviation becomes evident. Moreover, in line with the transparency principle, we have started to give more importance to sharing our views about the general economic outlook, current inflation and inflation outlook and informing about monetary and exchange rate policies through press releases, announcements, reports and every other means such as press meetings, interviews, speeches and presentations. The Law also set up the Monetary Policy Committee (MPC). Having got the instrument independence, the Central Bank moved from implementing monetary policies aiming at implicit inflation targets together with certain monetary aggregates as intermediary targets to an explicit inflation targeting regime.

For sterling borrowers, that bridge is built on the foundations of SONIA – the Sterling Overnight Index Average, produced every day by us at the Bank of England and based – unlike LIBOR – at around 60 billion pounds of real, daily transactions1;  -  And, second, while that work has been underway, we’ve shored up the old LIBOR bridge, through the FCA’s agreement with LIBOR panel banks to continue providing submissions to the benchmark. But those repairs were only ever temporary. The FCA can’t replace those markets that used to underpin LIBOR submissions: they are gone forever. And the FCA’s agreement with the panel banks runs out at the end of 2021. From 2022, therefore, the availability of LIBOR cannot be guaranteed. Something that is unsafe today will become lethal at the end of next year. 1  The Sterling Overnight Index Average (SONIA) is administered by the Bank and reflects the average of the interest rates that banks pay to borrow sterling overnight from other financial institutions See www.bankofengland.co.uk/markets/sonia-benchmark. 2  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  2  Avoiding that outcome is what we’re here today to discuss. But before we dive into the detail I want to leave you with three key messages: -  First, LIBOR transition affects every company that borrows in sterling. You cannot ignore it, or hope that it goes away: you need to act well before the end of 2021. -  But, second, there is time if you start now.