or losses, at least if those accounts were also to be marked to market. so gilt price movements necessarily all wash out once the public accounts are compiled on a consistent basis, at least so long as the assets are retained within the public sector 3. we do not, however, expect to retain all the purchased assets in the asset purchase facility to maturity. at some stage, as the recovery proceeds, the monetary policy committee will need gradually to remove the large monetary stimulus that we have imparted to the economy, otherwise we will be in danger of overshooting our 2 % inflation target. that monetary tightening will take the form of some combination of a higher level of bank rate and asset sales from the asset purchase facility to the private sector. the process of selling off the gilts can then be expected to push gilt yields back up towards where they would have been in the absence of the quantitative easing programme. when the asset purchase facility is finally run down, won ’ t the closing accounts tell us about the benefits or costs of the programme? the answer to this is : no. the first point to make is that the aim of quantitative easing and the asset purchase facility is to help the monetary policy committee achieve its macroeconomic objective, namely hitting the government ’ s inflation target without generating undue volatility in output. the accounts of the asset purchase facility are not designed to address these overall macroeconomic costs or benefits, which instead requires an assessment of the impact of quantitative easing on demand and inflation. as i have already noted, this is a difficult issue which is likely to keep researchers busy for many years to come. second, even if one were interested in the rather narrower issue of the impact of quantitative easing on the public finances, whether the treasury ends up with a profit or a loss from the asset purchase facility represents only a small part of the picture. gilt yields will be lower than they would otherwise have been during the period that they are held in the asset purchase facility, so reducing the cost of financing a given budget deficit. this needs to be factored into any calculation of the implications for the public finances. rather more significantly, quantitative easing is intended to boost spending and activity. in the process, it should raise tax revenues and reduce benefit payments. and, unless quantitative easing proves to be largely ineffective, this effect is likely to dominate the other elements of the calculation. finally, it is worth noting that normal monetary policy, conducted by varying bank rate, also generally affects

by the committee on payments and market infrastructures ( cpmi ) and the international organisation of securities commissions ( iosco ). all speeches are available online at www. bankofengland. co. uk / speeches operational risk is the risk of disruption from systems and processes, from human errors and management failures and from external events and external actors. all types of financial market infrastructure firms face operational risks. indeed, for many of these firms, it is the ‘ number one ’ risk they face. a serious operational incident affecting one of these global pipes is likely to have an impact on the system as a whole in several jurisdictions, rather than just upon the infrastructure firm itself. the pfmis require financial market infrastructure to identify plausible sources of operational risk, and ways to mitigate their impact. fmis are also required to have credible business continuity and recovery plans, with the aim of resuming operations within a maximum of two hours following the most disruptive events. however, as the infrastructure that supports the financial system grows in scale, complexity and inter - connectedness, the potential risks and costs of systemic operational risks increase as well. to successfully mitigate this requires a focus on both operational risk and on operational resilience ; the ability to respond and recover, as well as prevent and protect. this is well highlighted by the risk presented by cyber - attack. last year saw the ‘ bangladesh bank ’ incident in which $ 81 million of fraudulent payments were effected through the swift network. this has brought to the forefront the need to manage cyber risk not only in the infrastructure firm itself, but also in its surrounding ecosystem of users and intermediaries. this was an attack on a user rather than on the swift network itself. swift has responded with a customer security programme to reinforce customers cyber defences around their connection to swift and is developing plans for enforcement of the framework. the bank of bangladesh attack had a criminal motivation. it did not bring the system to a halt and, in a narrow sense, one could argue that financial stability was unaffected. i think, however, that would be a complacent view for two reasons. first, the attack risks undermining the credibility of a key piece of global financial infrastructure. and second, and perhaps more important, the attack highlighted the growing risk from cyber attacks generally, whatever the motivation. pmi - iosco : principles for financial market infrastructure ( 2012 ). principle 17 : operational risk. all speeches are available online at www. bankofeng