which will take the total sum bought to £325 billion. to give you some context, that represents about a fifth of the annual output of the united kingdom and around a third of the total stock of uk government debt in issue. why did we decide to inject further monetary stimulus into the economy? and how likely is it to be effective? we started quantitative easing in march 2009 in the aftermath of the collapse of lehman brothers, as the uk economy was undergoing its deepest post - war contraction. bank rate was almost as low as it could go and further stimulus was necessary to put a floor under demand and get the economy growing again. all told we bought £200 billion of gilts during that initial phase of quantitative easing. quantitative easing essentially involves trading one liability of the state – gilts – for another – monetary claims on the bank of england. we aim to buy mainly from non - bank private financial institutions, such as pension funds and insurance companies, not from the bis central bankers ’ speeches banks, as is sometimes erroneously claimed 1. when we buy a gilt, we simply credit the bank account of the seller with an appropriate sum. if the seller were indifferent between holding the gilt and holding the associated bank deposit, that is where things would stop. but because deposits tend to yield less than gilts and assets such as corporate bonds and equities, the seller is likely to want to buy some other asset instead. the consequence is upward pressure on the prices of a whole range of assets, including corporate bonds and equities. that increases the availability, and reduces the cost, of finance to corporates. it also boosts the value of people ’ s wealth, which should encourage more spending. as i noted a moment ago, we aim to acquire the gilts from institutions other than banks. but as a by - product of the purchase, banks will find that they have both more customer deposits and an increase in their claims on us ( what are known as bank reserves ). that may encourage them to increase their lending, though in the particular circumstances prevailing during and after the financial crisis, we expected this effect to be quite weak. that is in line with the observed weakness in bank lending over the past three years. our analysis of the first phase of quantitative easing suggests bond yields were around one percentage point lower than they would otherwise have been. and uk equity prices rose 50 % during the programme, though only a small part of that is likely to be down to quantitative easing

true market is and their responsibility to act in a way that is consistent with maintaining true markets. in terms of a perception of a lack of client focus, i took away two gaps that were raised. the first is a financing gap, which i felt came out during the first panel, and which some economic historians in the room compared to the ‘ macmillan gap ’ – the distance between finance and industry being too great. people talk today about an excess of savings not finding a home. in this country, it is felt most in terms of sme and mid - cap finance. many were struck by the potential ability of financial technology – fintech – to help bridge this financing gap, but i would emphasise that there was also bit of a caution, as i believe reverend giles fraser noted in the last panel. we should not get too far ahead of ourselves, but look to further evidence that it can bridge the gap. i think the chancellor is absolutely right that fintech has potential both in terms of expertise in finance and capability in technology. if these can be married effectively, we have an opportunity. there were a few specific examples that were mentioned that i would just like to reinforce. first, and as alex brummer very rightly emphasised, the opportunities that come from big data and a greater open architecture that is already there. as our chief operating officer charlotte hogg would note, the bank of england is one of the biggest repositories of big data. there is always a question about to what extent that can be leveraged more broadly into the system, and though it is still early days, the bank may want to consider taking this on as a challenge. jon cunliffe raised a separate and important issue with receivables finance, where fintech could make a real difference. following the crisis, payment terms for companies increased to 120 days and have not come back. we know there are effective fintech solutions to this which leverage off the credit of the payer. in such circumstances, and more broadly where fintech moves further into more traditional banking areas such as peer to peer and other lending, the bank recognises that we need to think about and take forward a proportionate, activity - based regulatory response. let me turn to the second gap in relation to a lack of client focus : an engagement gap, if i can put it that way. this manifests itself in a number of ways, as noted during the many insightful interventions during our panel