to some of the fault lines exposed by the financial crisis ; but there is still a long way to go. there will be as much to do in your 22nd year as there was in your 21st. happy birthday. references bean, c. ( 2009 ), “ the great moderation, the great panic and the great contraction ” schumpeter lecture at the annual congress of the european economic association in barcelona on 25 august 2009, available at : http : / / www. bankofengland. co. uk / publications / speeches / 2009 / speech399. pdf borio, c. ( 2010 ), “ implementing a macroprudential framework : blending boldness and realism ” http : / / www. bis. org / repofficepubl / hkimr201007. 12c. htm dale, s. ( 2009 ), “ inflation targeting : learning the lessons from the financial crisis ”, speech at the society of business economists ’ annual conference, london on 23 june 2009, available at : http : / / www. bankofengland. co. uk / publications / speeches / 2009 / speech395. pdf haldane, a. ( 2009 ), “ rethinking the financial network ”, speech delivered at the financial student association in amsterdam on 28 april 2009, available at : http : / / www. bankofengland. co. uk / publications / speeches / 2009 / speech386. pdf imf ( 2010 ), “ g - 20 mutual assessment process – imf staff assessment of g - 20 policies ” http : / / www. imf. org / external / np / g20 / pdf / 111210. pdf king, m. ( 2010 ), “ banking : from bagehot to basel, and back again ”, speech given at the second bagehot lecture buttonwood gathering, new york city on 25 october 2010, available at : http : / / www. bankofengland. co. uk / publications / speeches / 2010 / speech455. pdf mishkin, f. ( 2008 ), “ how should we respond to asset price bubbles? ” http : / / www. federalreserve. gov / newsevents / speech / mishkin20080515a. htm tucker, p. ( 2009 ), “ the debate on financial system resilience : macroprudential instruments ” at barclays annual lecture

liquidity in the interbank market, and individual banks faced higher uncertainty about their liquidity positions, which led to volatile and somewhat unpredictable demand for liquidity. for this reason, open market operations aimed also at ensuring the continued access of solvent banks to liquidity and at smoothing the functioning of the money market. in these circumstances, in order to continue steering very short term interbank money market rates to the minimum bid rate, it has been necessary to supply liquidity in a way which has allowed credit institutions to fulfil their reserve requirements relatively early in the maintenance period. that is to supply a relatively large amount of liquidity early in the maintenance period and a correspondingly smaller amount later in the maintenance period, so that the total amount of liquidity over an entire maintenance period is unchanged. this socalled “ frontloading ” of reserves is different from the practice followed in normal times, when liquidity was supplied evenly throughout the reserve maintenance period, so that its supply was the same in the beginning and at the end of the maintenance period. moreover, liquidity on different days of a reserve maintenance period was no longer substitutable during the turbulences, and short - term interest rates were no longer necessarily linked to liquidity conditions on the last day of the maintenance period, tending rather to behave as if each individual bank perceived its distribution of liquidity shocks as strongly biased to the tight side, even if this was of course not the case at an aggregate level. as a response to the changes in liquidity demand, the eurosystem implemented since august 2007 several, but relatively minor, changes to the way in which it supplies liquidity, while maintaining its framework for monetary policy implementation unchanged. first, as mentioned above, the eurosystem has adjusted the distribution of liquidity supplied over the course of the maintenance period, by frontloading the supply of liquidity at the beginning of the period and reducing it later in the period. note that liquidity is here defined narrowly as the banking system ’ s current accounts held with the eurosystem. roughly speaking, current accounts are equal to the difference between the outstanding amount of liquidity - providing open market operations and the liquidity - absorbing autonomous liquidity factors, which are those items of the eurosystem balance sheet which are not under control of the central bank, the most important one being banknotes in circulation. both in normal times and during the turbulences, the ecb has steered the aggregate amount of current accounts so that