1929 and 1938. fair values were now seen as more troublemaker than matchmaker. pressures to suspend fair values, from banks, regulators and politicians, began to mount. by 1938, after an initial recovery from the great crash, the united states was bracing itself for a double - dip recession. in response, under pressure from the federal reserve, president roosevelt suspended fair valuation of investment bank assets. he instructed bank regulators these remarks were given at the institute of chartered accountants in england and wales information for better markets conference on 19 december 2011, in response to a paper by christian laux. both the paper and remarks are forthcoming in accounting and business research ( july 2012 ). simonson and hempel ( 1993 ), plantin, sapra and shin ( 2008 ), haldane ( 2010 ). bis central bankers ’ speeches to revert instead to what today would be called amortised cost. this was regulatory forbearance on a system - wide scale. and a suspension of fair value accounting rules lay at its heart. fast forward half a century. during the 1970s, fair value principles began again to extend their reach. the united states savings and loans crisis in the mid - 1980s provided further impetus. one of the major contributors to the downfall of the thrifts was amortised cost valuation conventions, which hindered the recognition of interest rate risk. this allowed systematic over - reporting of the health of the thrifts. in response, the united states developed and introduced a prompt corrective action regime, the federal deposit insurance corporation improvement act ( fdicia ), with fair values at its core. but the wind was again about to shift direction in response to financial pressures. from the early 1990s, the united states was facing severe financial headwinds. a real estate crash placed us bank balance sheets under acute stress. 3 falling asset prices, marked to market, added to these financial pressures. questions about fair values resumed. in response, and echoing roosevelt in 1938, president bush granted the sec authority to suspend fair value rules. although this authority was not invoked, it demonstrated a willingness to provide system - wide forbearance through fair value accounting rules. today, the self - same cycle is in motion. during the long pre - crisis boom, fair value principles gained ground, in particular in the valuation of debt, equity and derivatives : in the us, through statement of financial accounting standard 157 ( sfas 157 ) ; internationally, through international accounting standard 39 (

would wish to exit from the strategy of buying assets and would wish to reduce the amount of assets held under the asset purchase facility. ” see for example alesina and summers ( 1993 ), klomp and de haan ( 2009 ) and king ( 2013 ). bis central bankers ’ speeches conclusion let me sum up. we are still learning how the post - crisis economy behaves, and some relationships in the data have proven slow to reassert themselves or may have changed. the recent plateau in wage growth despite the ongoing recovery is one example, and i will wait until i am convinced that wage growth will be sustained at a level consistent with inflation returning to target before voting for an increase in bank rate. in this sense, i will proceed with caution. but once i am convinced, absent further shocks, i can see bank rate rising more quickly than the path implied by the market curve at the time of the last inflation report. that is not to say i don ’ t understand the shape of the yield curve – market participants must consider all of the possible outcomes when making their decisions, and the yield curve could be weighed down by worries about the world. whatever the outcome, it will be important to maintain flexibility to respond to new data and events. the flexibility the mpc has had to pursue its target independently since 1997 has brought great benefits. the mpc has also shown flexibility in developing new instruments such as qe to achieve its goals. similarly, as monetary policy begins to tighten, the mpc will be focussed on bank rate as the marginal tool of monetary policy, given it ’ s more flexible in nature than qe. and occasionally, we might also consider tyre tread depth, just to see if the post crisis economy reverts to pre - crisis patterns or whether we need to think about the future a bit differently. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches references alesina, a. and summers, l. ( 1993 ) “ central bank independence and macroeconomic performance : some comparative evidence, ” journal of money, credit and banking, vol. 25, no. 2, pp. 151 - 162. brainard, w. ( 1967 ), “ uncertainty and the effectiveness of policy ”, american economic review 57, 411 – 425. broadbent, b. ( 2015 ) “ the mpc ’ s forecasts and the yield curve : predictions vs promises, ” speech given at reuters. dison, w