They are increasingly a source of finance for UK businesses. However, the ‘dash for cash’ in March 202011 led to a rapid deterioration in the functioning even of advanced-economies’ government bond markets and created market dynamics significant enough to raise the cost of lending. The episode clearly demonstrated the need to build resilience in market-based finance. 12  Given the global nature of market-based finance, the effectiveness of any policies in the UK will depend in part on policies implemented in other major jurisdictions. We are therefore working with international counterparts in the Financial Stability Board to take coordinated action to address these issues – including on open-ended funds, margins, the liquidity structure and resilience of core markets, to name a few. In the meantime, the FPC (and other UK authorities) need to continue monitoring them, starting by ensuring there is reliable data to do so. 2.The growth of cryptoassets and decentralised finance: regulatory frameworks need to evolve Another important challenge is seen in cryptoassets and decentralised finance (DeFi) which in recent years have grown to represent around 1% of global financial assets.13 Cryptoasset technology is creating new financial assets, and new means of intermediation. Many services now facilitated by this technology mirror those available in the traditional financial sector, including lending, trading and exchange, investment management and insurance. While that activity is currently small, if the pace of growth seen in recent years continues, interlinkages with the traditional financial sector are likely to increase.

Let me briefly mention a few of the lessons from our experience in Covid-19. First the capital framework does not in practice support use of bank capital buffers in a stress as we intended7. And that would have mattered a lot in the absence of the substantial government support for the corporate sector. Second, we need to change our approach to stress testing in a stress if we are to avoid those stress tests further amplifying any downturn8. And third, in a shock of roughly half the size of the global financial crisis, it was only large-scale use of central bank balance sheets that calmed dysfunction in the system of market-based finance.9 We are continuing to learn through the Russia-Ukraine crisis too. We are exploring concentrations in, and interconnections across, energy and other commodity markets, the financial system, and the real economy, as well as the potential for feedback loops between them. And we have observed too that commodity markets are relatively opaque. We must now develop the macro-prudential framework to reflect the lessons from these recent stresses. Looking beyond recent events, neither the financial system nor the economy stands still: there are clear structural changes that macro-prudential policy must confront. 1.The rise of market-based finance: vulnerabilities that are as much global as domestic One key challenge is that many vulnerabilities are as much global as they are domestic.10 That includes non-bank, or market-based, finance. Non-bank financial institutions currently represent around 50% of global (and UK) financial sector 4/7  BIS central bankers' speeches  assets.