to this end, the bank dedicates significant time and resources to tracking developments in the global economy and financial markets with a view to identifying potential threats to financial stability. major developments are discussed each month in the bank ’ s financial stability committee. within the bank, the financial stability committee occupies a similar position in relation to financial stability as the mpc does for monetary stability. bank staff present papers to the financial stability committee evaluating the overall conjunctural position and reviewing issues of specific concern. the staff assessment of financial stability is shared with the treasury and fsa and discussed with them in the standing committee, set up under the mou, that meets each month to monitor financial stability and to consider issues of common concern. the objective is to identify sources of instability before problems emerge, to be in a position to take preventative action or to respond quickly in the event of trouble. the bank sets out to articulate publicly its financial stability role and to communicate current concerns by the publication semi - annually of the financial stability review. each edition includes an overview of financial stability providing an assessment of current threats to the system, ranging from imbalances in the major industrialised economies or debt structures in emes, to sectoral issues such as equity market volatility or gearing in the telecoms industry. while other commentators may talk of economic miracles, you can rely on central banks to find disaster waiting in the wings! but if surveillance feeds off central bankers ’ capacity to worry, then crisis prevention and crisis resolution, working on rules to minimise the risk or the cost of a financial crisis, may be the only prospect for us to get a decent night ’ s sleep. crisis prevention : bank capital requirements i would like to discuss one particular weapon in the crisis prevention armoury, which is bank capital. this is, of course, a very topical subject at the moment, with the revision by the basel committee on banking supervision of the 1988 capital accord. importance of capital why does bank capital have a crucial role in crisis prevention? this question has two aspects : first, the importance of capital itself ; and second, the special role that banks play in the economic system. capital has a vital two - fold role. first, capital - or rather equity capital - acts as a buffer against insolvency. it therefore helps to protect the system and limit calls on the safety net. and second, equity capital helps to align the objectives of the firm ’ s owners with the objectives of the authorities

has come to us from abroad does not become lasting inflation generated at home. homemade inflation will not make us any better off as a country. those with weak bargaining power will fall further behind. that is why we have increased bank rate. this works through the cost of living in a different way, of course : by increasing the cost of credit, including rates on many mortgages. as mortgagors gradually have to pay higher rates, say as exiting fixed - rate deals are replaced by new ones with higher rates, their money left over for spending on other things will fall. chart 4 : average - quoted rates on new mortgages have risen in 2022 average - quoted rates on two - year fixed - rate mortgages as this chart shows, new mortgage rates are materially higher than they were a year ago, though they have come down from the elevated levels we saw in the autumn. this means that about 1 in 10 households will see their mortgages go up this year. if new mortgage rates rise by 3 percentage points, as market rates currently suggest, the ‘ typical ’ monthly interest payment will go up by just under £250. bank of england outreach programmes listening to people from all parts of the united kingdom it is no surprise that people who talk to us at our outreach events are worried about rising interest rates too. this is not just those on variable rates or those nearing the end of their fixed - term mortgage deals. even if home ownership feels remote for many younger people, they worry that rents could rise as landlords look to pass through higher mortgage rates. some older people have been able to save enough through the pandemic to pay off their mortgages early, but many struggle themselves or worry how younger people will cope. these concerns bring home that, by increasing bank rate by close to 4 percentage points, we have tightened monetary policy significantly. it is having an impact. let me say two things about that. first, with the external shocks that have hit the economy, there is no easy way out. people on lower incomes are struggling to make ends meet. we must ensure that the situation does not get worse through homemade inflation taking hold. the uk labour market remains very tight. since the start of the covid pandemic, we have seen a large increase in the number of people who do not take part in the labour market in this country. the uk labour force has shrunk. while not the focus of my remarks today, this feature of the uk labour