), lambda, speech given at the london school of economics, 16 january 2017. all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx to provide stimulus, central banks have taken policy rates to the effective lower bound and beyond by using forward guidance, new lending facilities and asset purchase programmes. in parallel, monetary policy communications have been transformed. committee decisions are now explained more fully, in a more timely and targeted way. given greater supply uncertainty, more details are provided about the assumptions underpinning forecasts. and in the face of large downside tail risks, more facets of the reaction function are being spelt out. while there have been many innovations, given the time available today, i will focus on two : communications including forward guidance ; and central bank facilities. communications including forward guidance for both the euro area and uk, the past decade has been marked by increased transparency and more focused communications. the ecb has followed each monetary policy decision with a statement and press conference at each meeting since its creation in 1999 and these were supplemented a year later with macroeconomic projections. in 2015, it dropped the frequency of meetings from twelve to eight to allow for a fuller passage of time between decisions, and supplemented the statement with a fuller account of its monetary policy deliberations, published four weeks after policy announcements. twenty years ago, the bank of england was publishing minutes of its monthly policy meetings and quarterly economic forecasts in its inflation reports. it didn ’ t however always issue statements following decisions. following the warsh report in 2015, we overhauled our communications. for similar reasons to the ecb, we moved from twelve to eight meetings per year, and we began publishing a statement every time we met and releasing minutes, inflation reports and monetary policy summaries simultaneously on the logic that one decision should merit only one news event. the mpc now provides much more detailed information on the assumptions that underlie our forecasts and regularly assesses them versus actual outturns. we release our key judgements for the global economy, domestic demand and the pace of demand relative to supply capacity, and we publish paths for variables that we and others can monitor to see whether the forecast is on track. we also now publish annual stock takes of the supply side of the economy and of the forecast errors we have made over the past year. last year, the mpc introduced layered communication to reach the broadest possible

by credit rating agencies to have a large degree of implicit government support thus making their public debt issuance cheaper as well. the funding advantage from being seen to be “ too big to fail ” has been estimated from a range of studies to be equivalent to a subsidy on the scale of hundreds of billions of dollars globally, 9 encouraging and enabling greater risk - taking by firms than true costs of funding would justify. separation also means that the structure of firms is simplified and hence they would be easier to resolve if necessary. the eu more generally is still deciding on its precise approach to structural reform, although the liikanen report ( 2012 ) took a slightly different approach from the ibc. liikanen made a range of recommendations, but these did not go in quite the same direction as the ibc see speech by andrew gracie “ tlac and mrel : from design to implementation ”, 17 july 2015, bank of england website. financial services ( banking reform ) act, 2013. for example, see the range of estimates in the imf global financial stability report, april 2014, chapter 3. bis central bankers ’ speeches proposals in that they recommended ring - fencing of the high risk activities within a group, whereas the ibc focussed on ring - fencing the retail deposit and payments activities. the anticipated outcome is that whatever is finally decided for the eu should not require uk legislation to change. work on implementing structural reform is underway : initial plans were submitted by the banks at the start of 2015, have been reviewed by the pra, and are being further developed. structural reform must be fully implemented by the affected banks by 1 january 2019. other this lecture wouldn ’ t be complete without addressing issues around the behaviour of firms, boards and individuals. along with capital and liquidity, firm governance is one of the most crucial aspects for a regulator. in particular how boards are constituted and how they operate. it has long been recognised that most firm failures can be traced back to governance issues. the regulatory approach to governance needs to be sensitive to avoid becoming “ shadow management ” : firms must be allowed to manage themselves, and indeed to make business judgements that mean taking calculated risk and hence might go wrong. the regulator ’ s interventions in board affairs need to be particularly measured and proportionate. the pra recently set out its general expectations in relation to firm governance in a recent consultation paper10. in addition to structural governance issues, the conduct of individuals has also raised considerable concern in the past few years