it into demesne control, instead of receiving a fixed nominal rent, the lord of the manor could take receipt of the real output of the land, which could be consumed, traded, or sold for silver at the going spot price. the consequence was that the richer the baron, the more land he had to exploit, and the greater his potential profits. the effect was to create a massively wealthy elite of oligarchs, now breaking free both of the middling ranks of the gentry at one end, and of the hard - pressed king ( or public sector ) at the other. in all of this, the option of demesne management was infeasible for the king, likely because it would have involved destabilising relations with the administrative class of “ sheriffs ” and other royal officials upon whom the king ’ s political stability depended. 6 causes of the inflation forget royal infighting, wars or the whiff of revolution, it is inflation that really sets the pulses of central bankers racing. and for good reason because closer inspection suggests that inflation may have been a significant catalyst to magna carta. historians estimate that prices were rising sharply in the early 1200s. the prices of agricultural goods, including wheat and oxen, probably doubled in that period. 7 evidence suggests that prices of linen, wax, lead and even palfreys – the toyota prius of medieval horses – were also rising rapidly. wages were rising as well – and to a greater extent than could have just been the consequence of medieval real - wage resistance. king john was paying his knights almost three times as much as henry ii ( even though they weren ’ t as productive on the battlefield ). 8 the daily rate for foot - soldiers had doubled. and limited evidence suggests the wages of skilled labourers on the crown estates probably increased by a similar proportion. 9 with pay growth approaching 20 % a year, wages really were fizzing! 10 the underlying causes of this inflation are debated among historians, but the most convincing argument is that the inflation was a monetary one, albeit with a twist. not harvey, p. d. a., ( 1973 ), “ the english inflation of 1180 – 1220 ”, past and present, no. 61, pages 3 – 30. given the countless other abuses of authority that were going on at the time, one wonders why it was so problematic for the rents simply to be “ renegotiated ” periodically. in part, custom dictated

. central clearing also brings greater transparency – in the run up to the crisis and during the crisis itself, authorities had very poor visibility over the network of derivatives transactions. that made it much harder to identify risks and the connections between institutions. all speeches are available online at www. bankofengland. co. uk / speeches not all derivative contracts are suitable for central clearing. where clearing is not possible, the post crisis reforms include similar requirements to margin and report bilateral derivative contracts. but the additional mutualisation and central default management benefits of central clearing, justify in my view, the authorities efforts since the crisis to move derivatives that are suitable for clearing onto ccps. these efforts have been successful. reforms since the crisis have led to a very substantial increase in the use of clearing services for both exchange traded and over the counter derivatives. for example, a decade on from the crisis, the amount of collateral covering over - the - counter ( otc ) derivative counterparty exposures of global banks has risen by over $ 800 billion, and the coverage of exposures with collateral has risen from about one third to nearly two thirds. this has led to an increase in the amount of collateral available to absorb market moves. for example the total initial margin held by uk ccps against derivatives positions has more than doubled over the last five years with the average level throughout 2017 standing at approximately £145bn at end - 2017. and, crucially, the shift to central clearing has led to a major simplification of derivatives networks ( see figure 1 ). figure 1 : ‘ multilateral netting ’ at ccps reduces aggregate counterparty credit risk and simplifies the network of exposures centrally cleared trades executed on 20 february 2017 in sterling interest rate swaps referencing six - month libor ( top ) — and the counterfactual had they not been centrally cleared ( bottom ) ( a ) sources : dtcc derivatives repository ltd, unavista ltd and bank calculations. ( a ) each yellow node is a clearing member ( the central node in the top chart is the ccp ). an arrow pointing into / out of a clearing member from / to a counterparty denotes that, once all transactions between the clearing member and the counterparty on 20 february 2017 are netted with each other, the clearing member is receiving / paying a fixed rate from / to their counterparty. the thickness of the red arrows is proportional to the size of the net transactions ( in terms of notional amount ) between the