5 % 3 % however, a hypothetical broad - based, always - on facility of this kind, available at terms no worse than those available to banks could remove the incentive for some types of nbfi to build stronger resilience, undermining the role of banks as liquidity providers in normal times, and putting public resources unnecessarily at risk potentially breaching the backstop goal ( b ). going to the other extreme and placing most weight on that goal might suggest having a facility that is triggered only in instances of clear dysfunction, after bank intermediation capacity is clearly exhausted. such a tool might be made available only to nbfis judged to have appropriate levels of self insurance, supplemented perhaps with a pricing and / or haircut schedule that varies according to the ex ante resilience of the nbfi and / or the intensity of attempts made to improve that resilience. current levels of resilience range widely across nbfis. in the uk, insurance companies are at the stronger end of the spectrum. 15 ldi funds are also now required to maintain strong levels of liquidity resilience consistent with their systemic role, under standards put in place following the autumn 2022 crisis. 16 these ldi standards have significantly bolstered the resilience of the wider defined benefit pension scheme sector and there is 14 the table captures only sales by individual nbfis that were net sellers over the relevant periods ( ie it does not include any gross sales by firms that were net buyers of gilts ) ; the table entries show the proportion of each sector's net sales as a proportion of overall nbfi net sales. 15 they are subject to prudential regulation covering liquidity risk ; the pra these regulations, and is considering how both regulation and supervision in this area might be further strengthened : see liquidity risk management for insurers | bank of england 16 bank staff paper : ldi minimum resilience - recommendation and explainer | bank of england bank of england a broader programme of work underway, in response to recommendations from the fpc and the work and pensions select committee, to ensure that the sector is able to take into account financial stability considerations on an enduring basis and be resilient to plausible future stresses. however, other firms captured by the data in figure 4 are subject to less demanding resilience standards. no final decisions have yet been made on these design choices but it is unlikely we will end up

also more effective. conclusion the first mais lectures launched the fight against inflation. with time and increased confidence policymakers would win that war only to lose the peace. as a consequence, george osborne ’ s 2010 lecture heralded the return of prudential supervision and the introduction of macroprudential policy to the bank of england. today ’ s challenge is to create a macroeconomic environment that provides the basis for strong, sustainable and balanced growth, the economist ’ s equivalent of a land fit for heroes. this evening i have sketched how the bank of england intends to makes its contribution. i am in no doubt that those who come after me will add to our collective knowledge of how best to coordinate the bank ’ s vast array of policy levers to achieve our fundamental mission. an open and confident bank will welcome such advice and criticism. why? because the need for broad macroeconomic management is not just an intellectual curiosity, but rather a reality that will persist for years to come. as the mpc has signalled, a low for long interest rate environment will likely be with us for some time. the mpc ’ s new guidance that any adjustments in rates, when they come, will be limited and gradual helps provide confidence to households and businesses that the mpc won ’ t take risks with the recovery. this in turn helps make the attainment of the inflation target more likely. at the same time, policymakers across the bank ’ s statutory committees are fully aware that an environment of relatively low and predictable interest rates could encourage excessive risk taking in financial markets and by households. 22 this puts a tremendous burden on both microprudential supervision and macroprudential management. moreover, the nature of a rapidly evolving global economy reinforces these pressures. sustained imbalances across countries, intense capital flow volatility and powerful disinflationary forces driven by the integration of the other half of humanity into the global economy will buffet our economy and financial sector for years to come. the bank can help turn those challenges into opportunities. through the coordinated use of the bank ’ s tools, risks to monetary and financial stability can be mitigated. through changes to the hard and soft infrastructure of markets fair, open and competitive markets can be re - built. through ideas and engagement, the global financial system can be reformed to secure an open, resilient system in which all countries have confidence and in which british businesses can thrive. to achieve this we are building a central bank for