the task of evolving our liquidity insurance framework will not end, but given the substantial reforms made to it over recent years, it is likely that the focus will shift to monetary policy implementation, as and when the mpc decides to move policy away from its current settings. as the head of the markets directorate it is not my role to speculate when the policy setting might change, but it is my job to ensure that decisions of the mpc are implemented effectively. that involves, in particular, ensuring that we have the tools needed for effective monetary control ; that is, keeping overnight market interest rates in line with bank rate. the bank ’ s current approach is to pay bank rate on the full balances held in reserves accounts. this is known as the “ floor ” system. as set out in the smf annual report, this approach remained successful at keeping sterling overnight market rates close to bank rate during 2014 – 15, with the “ wedge ” between policy rates and market rates relatively small over the past year. but over the year, activity in the sterling money markets remained low as the floor system, alongside a large - scale injection of reserves through qe, reduced the need for banks to transact in money markets. in the near - term, i expect that this system will remain effective at moving market rates in line with any change made to policy rates by the mpc. nevertheless, in the spirit of being prepared, and drawing on feedback from previous meetings of this committee 2, staff have developed plans should market rates persistently settle below bank rate, to such an extent that the bank decided it was necessary to intervene in support of monetary control. in such a scenario, the presumption is that the bank would issue one - week bank of england bills, draining reserves from the system. that would tend to put upward pressure on market rates, reducing the wedge that had opened up and tightening the link between policy and markets rates. the bank has a history of issuing these instruments successfully : bank of england bills were first issued in 2008, to drain excess reserves following the increased size of longterm repo operations. and bank of england bills also have the advantages of being widely tradable, offering a close substitute to deposits for most participants in the money markets, and of providing additional supply of high quality collateral. i have no particular expectation that the bank will need to issue bills in the foreseeable future, but the tool is ready if required. the move to the current floor regime

. 70 ). • by prioritising an international playing - field that is as level as possible and as sound as possible, speed is sacrificed. • second issue – some key policy discussions end up being away from home, away from the westminster parliament. mainly global in fact. • that global process is pretty transparent – consultative papers, speeches and so on. but perhaps not covered in any national media, including here in the uk, as much as one might expect. bis central bankers ’ speeches • but there is a deeper question here about the compatibility of domestic and global objectives. in the monetary sphere, it is well known that one cannot combine capital mobility, monetary policy focused on domestic price stability, and fixed exchange rates. solution in post - bretton woods world has been floating exchange rates. this does not mean there are no spillovers. hence information sharing in basel meetings etc. • there is a financial trilemma too. cannot combine cross - border banking, and an integrated international financial system more generally ; financial stability ; and national policies focused solely on domestic stability. • came home to roost in the crisis : global banks were, as mervyn king put it, “ international in life but national in death ”. financial autarky is not the answer. • solution : co - ordination and co - operation on the resolution of global banks. g20 financial stability board has led the way here. real progress. • means foreign countries have a stake in our banks, and vice versa. means the key policies are unavoidably international, global. as a trading nation we should welcome that. i hope these brief remarks provide the basis for a good discussion. in short, the traditional roles of central banks – for the first time ever reflected in uk legislation – touch every household and business in this country and, in truth, more widely. we need to be clear about what we can do and what we cannot do ; we need to operate consistently within our remit ; and above all we must be sufficiently transparent to make proper accountability realistic. that is what trust requires, and we are in the business of trust – trust in the value of money. bis central bankers ’ speeches