A prime example of this has been the Macro-prudential Research Network (MaRs), where researchers from the European System of Central Banks closely collaborated with experts from academia. The MaRs network was launched to develop core conceptual frameworks, models and tools providing research support to improve macro-prudential supervision in the EU. Its work, which was formally concluded last June, is summarised in a public report and represents a fine example of policy-relevant research. 1 To foster a constant communication with academics, the ECB also regularly organises seminars, conferences and workshops. These enable researchers, policy-makers and practitioners to meet and discuss the latest research findings and their implications for policy. In addition, to stimulate research at the highest academic standards, the ECB invites leading scholars to visit and conduct their research at the ECB, for example via the Wim Duisenberg Fellowship, and offers support to young researchers by funding five Lamfalussy Fellowships every year. Thomas Philippon’s contributions represent an excellent example of policy-relevant research. I will consider two main areas of his research which I find particularly interesting: the design of optimal interventions and the efficiency of the financial sector. In his 2012 paper, published as the lead article in the American Economic Review, Thomas and his co-author Vasiliki Skreta study the design of optimal public interventions in debt markets. The intervention aims at restoring an efficient level of investment when productive investments are forgone because firms face unfairly high interest rates due to adverse selection.

If that consensus exists, we stand ready to work with the market to deliver this complementary tool. We strongly encourage market participants to engage on this consultation and look forward to receiving responses. 15  For presentational reasons, Figure 3 shows the SONIA index and compound rates over different time periods from those shown in Section 2 of the accompanying Discussion Paper, but the underlying data and calculation methods are identical. 9  All speeches are available online at www.bankofengland.co.uk/news/speeches  9  Transitioning the Bank of England’s lending facilities away from LIBOR  Our second announcement today also relates to our presence in the market – specifically, how we treat LIBOR-linked collateral in our Sterling Monetary Framework lending operations. We released a discussion paper on this topic last year and today we set out the actions we intend to take. Our lending operations are designed to provide liquidity support to market participants experiencing either a predictable liquidity need or a firm-specific or market-wide shock. We lend to firms against a wide set of eligible collateral. But to protect public funds we apply a risk-averse ‘haircut’ to that collateral to protect against possible falls in its value in the period between a counterparty default and collateral sale, including in times of potentially severe stress. The current average haircut on pre-positioned collateral is a little under 25%, giving the Bank a lending capacity of over £ after accounting for existing lending (for example under the Term Funding Scheme).