it can shed light on the drivers of commodity prices and changes in market - based measures of inflation expectations. on the financial stability side, the significant complexities in the financial system, the lack of data and the constantly and rapidly evolving nature of financial markets mean that mi is particularly useful in helping us spot the emergence of stress and new developments and risks that might introduce potential vulnerabilities and fault lines in parts of the financial system. for more details, see the government ’ s consultation document “ a new approach to financial regulation : building a stronger system ”, available at http : / / www. hm - treasury. gov. uk / d / consult _ newfinancial _ regulation170211. pdf. the interim fpc ’ s terms of reference can be found at http : / / www. bankofengland. co. uk / financialstability / fpc / termsofreference. pdf. both documents are available at http : / / www. bankofengland. co. uk / financialstability / fpc / meetings / index. htm including, for example, the major commercial and investment banks, major wholesale dealers, second - tier banks, brokers, platform providers, corporate treasurers, asset managers, pension funds, insurance companies, hedge funds, private equity funds and many more risk managers, speculators, hedgers and end investors. we meet contacts in all the major financial sectors, including london, new york, boston and the far east. bis central bankers ’ speeches today, i want to use the insights gained from our market intelligence work, together with market data, to provide an overall assessment of the state of financial markets, including the extent to which they have recovered since the depths of the financial crisis, the impact of a renewed reach for yield on financial innovation, and the impact of the regulatory agenda on market functioning. the evolution of financial markets during the crisis to set the scene, it is instructive to look at the general pattern in markets over the past few years. chart 1 uses a “ heat - map ” to summarise data on issuance and spreads in primary and secondary markets for selected bonds and asset - backed securities ( abs ), compared to their historical averages. the widespread panic and financial market seizure of 2008 is clearly visible in the concentration of red and grey segments. the latter represent those periods in which there was no primary issuance or spread data because the markets were effectively closed. chart 1

), 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