simple and complex, old and new, uk - based and overseas businesses. all told, we spoke to firms accounting for about three - quarters of current reserves balances. what did we find? unsurprisingly, different firms thought about their reserves holdings in quite different ways – and no - one used the term ‘ demand curve ’! nevertheless, we can build up a picture of demand for reserves by understanding three core drivers of demand, common to all firms. first, at the most basic level, firms hold reserves to meet both expected and unexpected sterling payments during each day. the shape of this demand depends on firms ’ business models. calendar effects are important for retail banks, for example ; whereas wholesale banks and gilt - edged market makers are more affected by the ebb and flow of capital markets activity. and access to ( and efficiency of ) payment and settlement systems can have important implications for the reserves that firms need to hold. so innovations such as the bank ’ s rtgs renewal programme14 have the potential to transform demand levels. second, reserves are an important form of insurance against liquidity outflows over short, but multi - day, horizons. regulatory rules require firms to hold liquid assets to cover projected outflows over a https : / / www. bankofengland. co. uk / payment - and - settlement / rtgs - renewal - programme all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx thirty day period. this doesn ’ t have to mean reserves – firms could instead hold liquid government bonds, mortgage backed securities or even equities. but, unlike reserves, such assets have to be liquidated in the market before they can be used to meet outflows. of the firms we spoke to, even those with strong market access showed a marked reluctance to rely on that access as their only source of liquidity, particularly to meet projected needs in the initial days of a liquidity stress. for that, they preferred to hold reserves. taken together, these two factors make up what i will call a ‘ preferred minimum range of reserves ( pmrr ) ’ for firms. chart 9 illustrates the aggregate pmrr for the market as a whole, defined as the region where reserves begin to become scarce. we expect market interest rates to be relatively stable around bank rate in this region. this range will naturally include any buffers that firms are holding above their true minimum

with acceptably low risk. that, of course, is a sign of the times in which we live. very, very low interest rates for “ safe ” assets, and even many “ not quite so safe ” ones, have persisted for quite a long time now, and may well continue for some time yet. when i gave the first of these addresses 10 years ago, about the conduct of monetary policy, i certainly did not imagine that the world would look like this in 2016. since this is the last of these addresses i shall deliver, and since in fact it is the last public address i expect to give as governor, i intend to use it to look back at those 10 years. this will be my account of the bank's stewardship over that time. bis central bankers ’ speeches rather than a chronology of events, i will take the approach of looking at average outcomes over decade - long periods, which i think is more useful. i shall conclude with some observations about the future, though these should not be seen in any way as constraining the actions of the bank under the guidance of my successor. [ 1 ] the world economy the times have certainly been anything but boring, mainly because of events beyond our shores. ten years ago, the “ great stability ”, as lord mervyn king [ 2 ] labels it, was about to come to an end in the advanced economies. that period of reduced economic volatility dating from the mid 1980s was associated with macroeconomic outcomes that were remarkably good. but it wasn't a permanent state of the world. in fact, in some ways, that period of stability and confidence could be said to have sown the seeds of its own demise. low volatility in economic outcomes encouraged under - pricing of risk and a sense that higher leverage was safer for the individual household or firm ( or government ). but as leverage increased, this left the world financial system and economy more vulnerable when an adverse shock eventually came along. as we know, the international financial crisis was very serious and had major deleterious effects on economic activity in the advanced countries. at the same time, the “ china boom ” really started to find its legs in the mid 2000s. the associated rise in australia's terms of trade was something my predecessor had already remarked upon. [ 3 ] it ultimately went much further than even the optimists a decade ago would have expected. some of this was due to the financial crisis. as the crisis unfolded