minouche shafik : the interaction of monetary and macroprudential policy speech by ms minouche shafik, deputy governor for markets and banking of the bank of england, at the imf panel on “ revisiting monetary policy frameworks ”, lima, 10 october 2015. * * * i would like to thank david aikman, angus foulis, grellan mcgrath and alex varadi for input to the preparation of these remarks and don kohn for comments on an early draft. • the “ lean or clean ” debate used to be one of the most contentious in monetary policy until the crisis. should monetary policy “ lean against the wind ” in the expansion phase of the credit cycle? or should it remain solely focused on delivering the inflation target and “ clean up ” after the credit cycle contracts? the crisis taught us that cleaning up afterwards is a very expensive proposition. but are we confident enough in macroprudential tools to prevent the emergence of unmanageable risks during the credit cycle? the debate remains very much live, in part because macro - prudential policies are still nascent and we have not yet accumulated sufficient evidence through a credit cycle to make definitive judgements about optimal policy. “ lean versus macropru ” remains an area in which perfectly reasonable people can have very different opinions. • at one end of the spectrum there are those – such as lars svensson – who argue that the cost - benefit calculus is likely to be tilted heavily away from directing monetary policy at credit bubbles. at the other end of the debate there are those such as jeremy stein who argue for the active use of monetary policy to lean against the wind because it “ gets in all the cracks. ” or jaime caruana and his colleagues at the bis who argue that it would be appropriate for advanced economy monetary policy to begin to normalise in order to head off emerging macroprudential risks. • i will aim to show that there are merits to elements of all of these arguments. but where the institutional set up and full spectrum of macro - prudential tools are available, there is strong case for using monetary policy only as a last resort for tackling financial stability risks. i will try to illustrate this argument with experience from the uk. • let me start with a simple question : can monetary policy be used to lean against the wind? the answer to that question is “ yes ”, because monetary policy and macroprudential policy both affect financial

andrew bailey : the uk bank resolution regime speech by mr andrew bailey, executive director for banking services and chief cashier of the bank of england, at the institute of chartered accountants in england and wales ( icaew ) financial services faculty breakfast, london, 26 november 2009. i am grateful to peter brierley, victoria cleland, iain de weymarn, geoff davies, tony foster, andrew hauser, orla may and paul tucker for their comments and assistance. * * * the uk bank resolution regime thank you for inviting me to speak this morning. one of the characteristics of bank resolutions, to which i will return later, is that they have to be done quickly to a fixed deadline and involve working through the night. they also require extensive involvement by accountants and lawyers, so, i have had some experience with spending nights and early mornings with accountants. the only, but important difference, is that i don ’ t get to choose when to spend my early mornings on resolutions, whereas you did choose to listen to me early this morning, for which i am very grateful. some history the 2009 banking act, passed in february, created the new bank resolution regime in the uk. in its first nine months it has been used once, at the end of march for the dunfermline building society. there is a long history of involvement by the bank of england in dealing with the problems of banks in the uk in order to underpin the stability of the financial system, much longer than the history of banking supervision. the history of the bank in the nineteenth century features quite a few such interventions. more recently, although none came amid conditions comparable to those which occurred last autumn, the bank was extensively involved in resolving problems in the secondary banking crisis of the 1970s, in johnson matthey bankers in the 1980s, and then in the early 90s with a number of smaller banks. my own first involvement with resolving banks came at that time, with the resolution of national mortgage bank. we now face a much bigger challenge in terms of building a more robust financial system. there are three parts to this task : regulation, structure and resolution. today, i am going to talk about the last of these. in the past, our resolution toolkit was limited. we could use the bank of england ’ s own financial resources, as we did with johnson matthey bankers and national mortgage bank. or, we could determine that it was not necessary to provide financial support on grounds of a threat to