its deposits. this can precipitate the suspension of payments as a result of lack of liquidity even when a bank is solvent as a going concern ; and the forced realisation of illiquid assets may in itself result in insolvency. moreover, any suggestion that one bank is in trouble may be taken - perhaps wholly unjustifiably - as evidence that other banks are likely to be facing similar problems, especially when they are engaged in similar activities. bank runs can for this reason become contagious. and the risk of contagion is increased by inter - bank exposures, including those arising from the banks ’ role in the payments system. so the special nature of banks has reflected not just their distinctive functions, and the importance of those functions to the wider economy, but also their peculiar vulnerability to liquidity pressures. central banks evolved in response to this vulnerability, which gave rise to a readiness to act as lender of last resort to the banking system in situations in which substantial systemic disturbance could otherwise occur and to an on - going concern for the macro - prudential characteristics of the banking system. and while this concern relates to the banking system as a whole, last resort assistance, when it is judged to be necessary, is extended to individual banks because problems of course arise in the first instance at the level of the individual bank. now, the fact that central banks ( in conjunction as necessary with governments ) are prepared, in certain circumstances, to extend support in this way encourages bank intermediation ; it represents in effect a form of subsidy, implicitly justified as being in the wider interest of the economy. it helps to preserve public confidence ; and it enables the banks to take on more maturity transformation or risk than they could otherwise, so lowering the effective cost of their intermediation. but it has long been recognised that if central bank support is made available too liberally - in situations where there is no genuine systemic risk, so that it comes to be relied upon as a matter of course, then that would give rise to moral hazard. the extent of bank intermediation would be unjustifiably expanded. on the one hand, the banks themselves may be encouraged to take on excessive risks ; while, on the other, depositors may be encouraged to ignore risk and to become literally care - less as to where they place their deposits. so, both the safety and soundness of the banking system, and its competitive efficiency, and that

with monetary and financial stability frameworks - and crucial in cementing the success of both. i have done my bit, leading the bank ’ s outreach programmes and through 32 working papers, 75 published speeches, over 100 regional visits, around 150 published articles in books and academic journals, and many hundreds more unpublished speeches and schools talks. to say nothing of several spectacularly unsuccessful books. looking ahead, the transparency revolution has yet to run its course. there is more the bank can do to deepen and broaden its engagement with a wider audience. there is further for the bank to go in harvesting the stories from this audience to inform its view of the economy. and there is more the bank can do to widen and deepen its educational offering in schools. on each of those fronts, however, the bank has over the course of the past ten years established robust foundations on which to build. haldane ( 2018b ). all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice when it comes to one particular aspect of transparency - forward guidance - i think a more fundamental rethink may be needed, however. forward guidance was introduced by central banks after the global financial crisis. in principle, it offered real promise. offering a soft pre - commitment to a given policy path could bring forward some of the effects of future policy, giving it extra bang for its buck. 41 in practice, these benefits are only achievable if the policy guidance issued is hard enough to offer some credible pre - commitment, at the same time as being soft enough not to lock central banks in too tightly should circumstances change. this is a classic three bears problem : how to choose a form of words that is neither too hard, nor too soft, but just right. getting guidance just right is a problem central banks, a decade on, have not solved satisfactorily. in my view, with few exceptions forward guidance has ended up either being too vague and ambiguous to offer an effective source of assurance to the outside world, or a source of regret among central banks who have over - committed to something ex - post undesirable. sometimes, it has been a bit of both. as i see it, the structural problems with forward guidance come in two flavours. first, the type of forward guidance that financial market participants crave is precise, time - specific guidance. this makes their job of pricing assets