The views expressed here are not necessarily those of the Financial Policy Committee. References Aikman, D., J. Bridges, S. Hacioglu Hoke, C. O'Neill, and A. Raja. (2019a). “Credit, capital and crises: a GDP-at-Risk approach”. Bank of England Staff Working Paper No. 824. Aikman, D., P. Chichkanov, G. Douglas, Y. Georgiev, J. Howat and B. King. (2019b). “Systemwide stress simulation”. Bank of England Staff Working Paper No. 809. Allen, W. A. (2022). “Models of Central Banking and the Organisation of the Bank of England”. Available at SSRN 4283767. Altunbas, Y., L. Gambacorta and D. Marques-Ibanez (2014). “Does Monetary Policy Affect Bank Risk?”. International Journal of Central Banking, 10(1), 95-136. Aramonte, S. and P. Rungcharoenkitkul (2022). “Leverage and liquidity backstops: cues from pension funds and gilt market disruptions”. BIS Quarterly Review, December. Bailey, A. (2022a). “The economic landscape: structural change, global R * and the missinginvestment puzzle”. Speech at the Official Monetary and Financial Institutions Forum. Bailey, A. (2022b). “Monetary policy and financial stability interventions in difficult times” Speech at the G30 37th Annual International Banking Seminar, Washington, D.C. Balls, E., J. Howat and A. Stansbury (2018), “Central Bank Independence Revisited: After the financial crisis, what should a model central bank look like?”. Harvard M-RCBG Associate Working Paper No. 87. Baranova, Y., G. Douglas and L. Silvestri (2019). “Simulating stress in the UK corporate bond market: investor behaviour and asset fire-sales”. Bank of England Staff Working Paper No. 803. Bean, C. (2010). “Joseph Schumpeter Lecture The Great Moderation, The Great Panic, and The Great Contraction”.

It looked, on the face of it, like there could be tension between the two[22]. I would argue our institutional arrangements handled this well. First the Bank, following a recommendation from the FPC, made the decision to intervene in markets explicitly on financial stability grounds. That made accountability and purpose clear. Second, we designed the intervention to be targeted – buying long-dated and later index-linked  Page 8  gilts that LDI funds needed to sell to reduce their leverage. Third, it was explicitly temporary, running for only 13 days. In November, just a few weeks after our financial stability operations ended, Quantitative Tightening (QT) sales had begun[23]. And by 12 January – just three months after the end of our operation – the gilts we purchased had been sold back into the market[24]. With this temporary and targeted intervention we were able to do what was needed for financial stability without treading on the toes of monetary policy[25]. And while there may have been a difference in direction of policy – buying versus selling gilts – the goals were complementary. The aim of our intervention was to prevent financial stability from being threatened by severe dislocations in gilt markets. With the gilt market dysfunctional, monetary policy would have had unpredictable effects and would likely not have fed through to the economy as expected. So stabilising the market also supported the conditions for monetary policy to be carried out as normal. Looking ahead Surviving this crisis doesn’t mean the FPC can relax.