prices and demand, relative to the may - implied scenario path. this is of course not the only news about the uk economy since may. and nor am i inviting too literal an interpretation of my thought - experiment. i offer it simply as a means of sizing the upside news to the economy since may, illustrating its presumptive implications for monetary policy and providing a baseline against which downside risks to the economy can be judged, including from higher unemployment. it was this judgement that lay behind my decision to leave the monetary stance unchanged at the june meeting. looking ahead, risks to the economy remain considerable and two - sided. although these risks are in my view slightly more evenly balanced than in may, they remain skewed to the downside. of these risks, the most important to avoid is a repeat of the high and long - duration unemployment rates of the 1980s, especially among young people. like the rest of the mpc, i stand ready to adjust monetary policy, at speed, if needed to support the economy and return inflation to its target on a sustainable basis. at the same time, it is important to recognise the limits to what monetary policy can achieve. monetary policy can help to deliver the monetary and financial conditions necessary to support households and businesses – and is doing so. but monetary policy can do relatively little to avoid problems caused by structural or sectoral shifts in the economy, such as structurally high rates of unemployment. with interest rates along the yield curve close to zero, there is also simply less room for monetary manoeuvre than in the past. before the covid crisis, i expressed concerns about the growing “ dependency culture ” around monetary policy. 21 recent events have done nothing to allay those concerns. price stability is an anchor on which all societies and economies depend for their stability and success. at this time of momentous uncertainty about the health of our societies and economies, it is more important than ever that central banks are not over - burdened and that the anchor of price stability is not disturbed. thank you. haldane ( 2019 ). all speeches are available online at www. bankofengland. co. uk / speeches references aaronson, d, brave, s, butters, r, sacks, d and seo, b ( 2020 ), ‘ using the eye of the storm to predict the wave of covid - 19 ui claims ’, federal reserve bank of chicago working paper, no. 2020 - 10. barro, r

by bill mcdonough, president of the new york fed, unveiled its'second consultative package'which sets out the details of a new accord. the intention is that this should be agreed by around the turn of the year, in order to allow implementation by 2004. we warmly welcome the new proposals and have played a major part in their negotiation alongside the uk financial services authority and other g10 central banks and regulators. we particularly support the proposed use of banks internal ratings to calculate capital. banks should know more about the riskiness of their individual borrowers than, for example, external rating agencies or supervisors and the new accord will provide them with the proper incentive to do so. the new accord also recognises that in today's complex banking markets, a focus on capital adequacy alone is not enough. this has to be reinforced by a rigorous review of banks'internal risk management processes, and also by greater transparency and market discipline. together, these three mechanisms - which are intended to be mutually reinforcing - are known as the three'pillars'of the new accord. a fundamental change within the first pillar - capital levels - compared to the original accord is that improved risk management in banks has allowed the proposed new accord to incorporate greater sensitivity of credit risk capital charges. there will be a menu of approaches, depending on the sophistication of the bank. a'standard'approach differentiates between credit exposures on the basis of external ratings. a'foundation'internal ratings based approach will allow banks to differentiate between credit exposures on the basis of their internal estimates of borrower default probabilities ; and an'advanced'approach allows other inputs required to assess credit risk also to be provided by the bank, rather than the regulator. in addition to all this, there will be for the first time an explicit capital charge for operational risk. systemic implications of the revised accord what i have described so far is how the accord is intended to be applied to individual banks. but given the bank of england's responsibilities for the stability of the financial system as a whole, our principal concern is with the overall impact on the system. the basel committee has said that the new accord is intended broadly to deliver the same level of bank capital on average across banks as at present. how should we assess the adequacy of this from the viewpoint of overall financial stability? as i suggested earlier, the role of bank capital is to provide a buffer sufficient to cover unexpected losses.