andrew bailey : a resilient financial system speech by mr andrew bailey, governor of the bank of england, at the thecityuk annual dinner, london, 10 february 2022. * * * it ’ s a pleasure to be here this evening, and let ’ s take the fact that we are able to be here as a positive sign of things to come. adrian, it ’ s timely to recall that, early on in the covid era, you and i started to talk about the importance of ensuring that the financial system was able to support the economy through the pandemic, and about the need to mobilise to ensure that long term capital would be available for businesses as we came out of the pandemic and beyond. those discussions formed an important input to the work of the productive finance working group, work which continues and for which i want to thank john glen for his leading role and commitment and nikhil rathi too. that work is not done, but it has more momentum and substance as a consequence of our early engagement. i am going to say a few words on the subject of resilience, what it means in finance and how important it is. in march 2020, nearly two years ago, we had our initial very difficult time with some financial markets, the so - called “ dash for cash ” where weaknesses in the system of market based finance amplified the initial covid shock. and absent significant intervention from authorities here and in other countries, would have risked tightening financing conditions significantly and made the impact of the pandemic much worse. tackling the causes of that is today a major area of work both internationally and domestically. for banks, we tested rigorously to ensure safety and soundness, and particularly that banks could support the economy through these very hard times. indeed, we tested to make sure this support could continue through even harder times, and the answer was positive. this matters greatly because having a resilient system has meant that business lending could be sustained, and mortgage servicing pauses to support households seriously affected by covid and its economic effects were extensively available and used, all to assist with dealing with the consequences of covid. it has been the first major test of the post - financial crisis reforms to regulatory standards. in my assessment this outcome mainly passes the test of resilience, accepting both that we have work to do on the lessons from the dash for cash, and that we can never stand still because the positive benefits of innovation also

money / documentation / 061124. pdf. all speeches are available online at www. bankofengland. co. uk / speeches but it happened alongside it. and, since it seems likely to persist, it means our balance sheet is also likely to remain materially larger than pre - crisis. exactly how much larger that means is likely to depend on a range of factors : risk appetites, perceptions of the nature of future liquidity shocks, and developments in regulation. and some of these factors may well vary over time. understanding the net effect of these factors on aggregate reserve demand is an important question for implementing monetary policy, as well as for our risk management of the balance sheet. reflecting this, we launched a discussion paper in early august which examines the different factors in more detail, and have begun a series of discussions with market participants to help us understand them further, framed around these six questions. we will continue gathering inputs until the end of october – and if anybody here would like to contribute they would certainly be very welcome – and will provide further information as our thinking develops. conclusion in conclusion, what do these developments mean overall? they mean that the bank ’ s balance sheet is a key part of the infrastructure for securing monetary and financial stability for the good of the people of the uk. and that infrastructure is future - proofed. we regularly execute a variety of operations. we test facilities that we are not actively using, and encourage firms to be sure of their operational capability to use them. we have banks ’ collateral pre - positioned with us so we stand ready to lend at short order, if needed. and we support all of this with the appropriate risk management framework, to ensure that as well as supporting firms and markets, we aren ’ t unduly jeopardising public resources. and all this means that our balance sheet is fit for purpose to underpin whatever policy decisions, covered by the bank ’ s remit, are made in the future. see also carney, m. ( 2018 ), “ new economy, new finance, new bank ”, mansion house speech 2018, available at https : / / www. bankofengland. co. uk / - / media / boe / files / speech / 2018 / new - economy - new - finance - new - bank - speech - by - mark - carney. pdf. the discussion paper is available at https : / / www. bankofengland. co. uk / paper /