##i case illustrates, there is a further argument against over - dependence, namely that it's a two - way street. the dependencies go many ways, and thus the incentives to co - ordinate and co - operate are much larger. in this world, fragmentation would be positively dangerous. underpinning the extensive co - operation and co - ordination are international regulatory standards. they provide a core of assurance to support open financial systems. to be honest, some areas are ahead of others. the basel committee has made most progress, though it is essential that we see a consistent implementation of the so - called basel 3. 1 package. we have more to do in the various parts of the non - bank world, and the financial stability board is very much on the case. but this does not mean that in all jurisdictions the rules must be exactly the same. we are most interested in the outcomes. there will be differences to fit local markets, and again when that is done in a transparent and well understood way, it is sensible and fine. all of that fits within a framework of public policy where the basic objective of financial stability is common, and there should be effective frameworks established through international regulatory standards underpinned by trust and co - operation. to conclude, we must be alert to the pressure for fragmentation, both in the global economy and financial system. the costs that go with such fragmentation are real and undesirable. the better approach is strong articulation of a common public policy objective in terms of financial stability, accompanied by effective co - ordination and cooperation. these are not impossible ideals – we have real evidence of the system working. thank you. i am grateful to sarah breeden, lee foulger, karen jude, rhys phillips, danny walker and michael yoganayagam for helpful comments and assistance in helping me to prepare these remarks. 1 sasha mills speech at the isda derivatives and trading forum, 7 november 2023. 4 / 4 bis - central bankers'speeches

to potential. a period of strong ( weak ) growth could then be expected to lead to excess demand ( supply ) and a tendency for inflation to move above ( below ) the target. consequently it was quite rational for market participants to expect the mpc to increase ( reduce ) bank rate. but things are different now, as there is potentially a substantial margin of economic slack that needs to be absorbed. in that case, the steepening in the short end of the yield curve ought to be far less pronounced. fortunately, that is exactly what we see in the most recent data. the curve has steepened alongside the sharp increase in the pmi, but by far less than similar episodes of rising growth in the past would suggest. this too may be an indication that the guidance has had some effect in preventing unwarranted movements bis central bankers ’ speeches at the short end of the yield curve2. i am sure, however, that there is scope for much more analysis of the impact of our guidance on the behaviour of market interest rates and, indeed, on the broader economy. that guidance is, of course, qualified by three overrides or “ knockouts ”. two of these relate to the risks to price stability. one of these stipulates that our own projection for inflation 18 – 24 months ahead should be at least as likely to fall below 2. 5 % as to be above it. the other asks whether there is any evidence that measures of the inflation expectations of households, businesses and market participants have become insufficiently well - anchored to the target. at this stage, we do not see anything to worry about on this score. the third override condition, delegated to the bank ’ s financial policy committee, relates to whether the monetary policy stance is resulting in the build - up of dangerous financial stability risks. if the fpc cannot contain these risks using the range of recommendations and powers at its disposal, then it will alert the mpc, who will then decide whether an increase in bank rate is called for. increasingly noisy commentary that a new housing bubble is brewing – and concerns that the second stage of the help to buy scheme will add fuel to the fire – may mean that this condition becomes material. i do not have time left today to do justice to this issue. but it is important to remember that mortgage approvals for house purchase are still running at a little over half their pre - crisis average and, outside london, house price inflation is still quite modest.