call the quantitative individual liquidity guidance ( ilg ). 17. bank of england financial stability report, june 2018 18. for example, see pra supervisory statement 24 / 15'the pra's approach to supervising liquidity and funding risks ', section 4 – drawing down liquid asset buffers, june 2015 19. see speech by jon cunliffe ‘ learning from the dash for cash – findings and next steps for margining practices ’, february 2022 ; and speech by andrew hauser ‘ seven moments in spring : covid - 19, financial markets and the bank of england ’ s balance sheet operations ’, june 2020 20. speech by andrew hauser ‘ why central banks need new tools for dealing with market dysfunction ’, january 2021 21. see financial stability board analysis on covid - 19 support measures. 22. bcbs ( 2021 ), ‘ early lessons from the covid - 19 pandemic on the basel reforms ’, implementation report. 23. for example, gerba and katsoulis show evidence for the period 2016 - 2020 that where banks were increasing lcrs, they reduced longer - term reverse repo lending against lower quality collateral. 24. bcbs ( 2021 ), ‘ early lessons from the covid - 19 pandemic on the basel reforms ’ 25. bis ( 2022 ), ‘ market dysfunction and central bank tools ’, implementation report., markets committee paper. 26. the scenario was severe enough to force banks to use their liquid assets, but most banks had taken enough liquidity raising actions to come out of the stress period at above 100 % lcr ( the average lcr level is 140 % at the start of the stress period and 105 % at the end ). 27. bcbs ( 2021 ), ‘ early lessons from the covid - 19 pandemic on the basel reforms ’, implementation report. 28. for example, see eba ( 2021 ), ‘ guidelines on recovery plan indicators under article 9 of directive 2014 / 59 / eu ’ 29. diamond, d w and dybvig, p h ( 1983 ),'bank runs, deposit insurance, and liquidity ', journal of political economy, vol. 91, no. 3, pp. 401 - 419. 30. the ‘ historical lookback approach ’ ( hlba ) used to compute the risk of future margin outflows, relies on the margin flows over the previous 24 months to determine the hq

household inflation expectations and the breakeven inflation rate in the market entails risk premiums. the effect that the real rate has on domestic demand and inflation depends on what the equilibrium real rate is considered to be at any given time ; that is, the real rate that neither stimulates nor dampens the economy. the equilibrium real rate has probably fallen in iceland, as it has in most economies in the wake of the financial crisis, but exactly where it lies is highly uncertain. one of the monetary policy committee ’ s tasks is to attempt to assess it. it is normal that central bank interest rate should rise above equilibrium when a positive output gap develops and inflation is above target, but neither is the case at present. that being so, it was appropriate to contain the rise in the real rate by lowering the bank ’ s nominal interest rates. bis central bankers ’ speeches some will surely ask : shouldn ’ t the bank have lowered interest rates earlier? hasn ’ t the monetary stance simply been too tight in the recent past? i don ’ t think this is the right time to dissect these questions, not least because many things look different in the rear - view mirror. as is said in njals saga, “ everything is ambiguous in retrospect. ” that said, i think there are solid arguments in favour of a negative response to both questions. as regards timing, it is worth mentioning that it was not until very recently that inflation expectations have moved as close to target as they are now. as regards the latter question, most measures of the monetary stance have been well within normal range for quite a while, and there are few other signs that it has been too tight, expect perhaps in the past few months. for example, nominal growth in broad money measures about 6 % after adjusting for factors that are largely unconnected to domestic economic activity, such as deposits of failed financial institutions in active ones. this growth is consistent with the situation that should exist when the economy is at equilibrium – when inflation is at target and output is at capacity. an examination of nominal gdp growth gives a similar result. based on forecasts for 2014, it will average 5 % in iceland over the period 2011 – 2014, as compared with just under 4 % in the us and the uk, about 2½ % in sweden – which is just above the inflation target alone – and about 1½ % in the euro area, which is even below the inflation target for the region. this has been used to support