risks ; volatility ; operational challenges in accessing liquidity ; and exposures to amplification mechanisms from the wider system. firm stress testing and resilience must be set with reference to the system and to market dynamics and not just a firm ’ s own atomistic actions. indeed this is where associations such as yourselves, isda and aima, can be hugely supportive in sharing best practices and industry standards. ldi funds have demonstrated the art of the possible here, by building resilience at speed when severe stress demonstrated the clear need for it. regulators worked with ldi funds during the bank ’ s operations to ensure greater resilience for future stresses. and in aggregate, intelligence suggests that ldi funds raised over £40 billion in funds and made over £30 billion of gilt sales during our operations, both of which have contributed to significantly lower leverage. as a result, ldi funds report that their liquidity buffers can withstand very much larger increases in yields than before, well in excess of the previously unprecedented move in gilt yields. and so the risk of ldi fund behaviour triggering ‘ fire sale ’ dynamics in the gilt market and self - reinforcing falls in gilt prices is – for now at least – significantly reduced. it is important that it stays that way. others need to act too. banks have an important role to play in reducing risks both to themselves and to the wider system from non - bank leverage. that starts with information. as seen with archegos, imperfect information on overall positions leads to inadequate risk management. so a first step is for lenders to require greater transparency of hidden leverage taken by their counterparties. prime brokers should have access to data on a fund ’ s overall leverage, not just the portion to which they have contributed, just as banks ask household borrowers about their student loan repayments and credit card debts when issuing a mortgage. banks, like their non - bank clients, need also to improve their stress testing to include better understanding of market dynamics and structural shifts that might change correlations and norms. banks need to develop a laser like focus on wrong - way risk, where the value of collateral held as security falls in the very situation where the counterparty defaults. and to consider if attempts to realise collateral might further add to negative price dynamics. stress testing is also needed across sectors to understand how correlations in risk exposure can lead to correlated behaviours in stress. and stress tests need to

remained strong, may well decelerate. so, as the g7 ministers and governors noted in their communique on saturday, downside risks to the world economy remain. these risks, and the current account imbalances i referred to before, mean that we need to be prepared for the possibility of large changes in exchange rates, although no one can predict the magnitude or timing of those changes. the second price i want to consider is the oil price. yesterday the spot price of brent crude closed at $ 26 a barrel, up 34 % from the level at the time of the bank's february inflation report. volatility of oil prices has been a feature of the past few years. at the start of 1999 the price was $ 10, by the autumn of 2000 it was $ 37, six months ago $ 20, and today $ 26. uncertainty about oil prices is likely to persist for some time. the recent jump in the oil price reflects uncertainty in the middle east, rather than expectations of a sharp recovery in the world economy, as can be seen from the fact that the price of oil to be delivered at future dates, in two years time for example, is much closer to $ 20. nevertheless, higher oil prices raise inflation in the short run, and depress consumption and activity further ahead. the third price that matters for domestic demand is the average real wage rate. real wages from the employers'perspective - your perspective - the cost of employing an additional person, have been growing at an annual rate of under 2 % over the last couple of years, which is approximately equal to the underlying rate of productivity growth and so appear sustainable. but real wages from the employees'perspective, the real value of take home pay, have been rising at a much higher rate, around 4½ % over the past year or so, partly as a result of the more favourable terms of trade, which seems unsustainable. this difference in growth rates is likely to reverse. the terms of trade will not, in all likelihood, continue to rise. and last week's budget raised national insurance contributions. in the long run, the higher levels of both employer and employee national insurance contributions will result in lower growth of real take home pay - that is simply the price of better public services. real incomes need not fall but, for a short time simply grow more slowly than otherwise. indeed, if productivity growth rose, then real wages growth need not fall at all. profits may bear