- year uk government bond yields over the indicated periods. this identification strategy uses the fact that the volatility of asset prices change over time, to identify country - specific shocks in a model. these longer term trends overlaid by the very recent market turbulence are impacting on the real economy in many ways. a key channel is obviously through the interest rates faced by households and businesses when they want to borrow, for example to buy houses or to invest. fixed - rate mortgages have become increasingly popular in recent years and now represent 95 per cent of the flow of new lending and 80 per cent of the stock. two - year fixedrate products are particularly popular and their cost to the lenders who provide them is derived from two - year interest rate swaps. a year ago the two - year swap rate was 0. 5 %, a month ago it was 4 %, after the 22 september mpc meeting it was close to 4. 5 % and at yesterday ’ s market close it was around 5. 4 % having peaked at nearly 6 % in the intervening fortnight. ( chart 6 ). chart 6 : uk 2 - year swap rate sources : bloomberg finance l. p. and bank calculators the bank ’ s latest figures for quoted mortgage rates in september were published this morning. because these are averages for the month they lag somewhat market measures, but the increases are still marked. quoted mortgages rates on two - year fixed rate mortgages increased by around 50bps between august and september and were up by nearly 300bps compared to last september and have been rising further into the start of october. recently lenders have also withdrawn a large number of mortgage products from the market because of the turbulent market conditions. uk - specific factors also have had a particular effect on the price of long - dated uk government debt, which fell very sharply over a very short period, leading to dysfunction which, had it continued or worsened, would have been a material risk to uk financial stability. the bank started intervening in this segment of the gilt market on 28 september, in a timelimited and temporary way. because this is not a monetary policy operation – although it involves buying assets i think of it as an operation designed to buy time - i won ’ t say any more about it here [ 5 ]. markets continue to be volatile and so extracting any signals from the noise is even more challenging than usual. one key consideration for the mpc at its upcoming meetings will

ardian fullani : the fight against money laundering luncheon speech by mr ardian fullani, governor of the bank of albania, at an anti money laundering workshop, tirana, 22 june 2005. * * * dear participants, the subject of today ’ s workshop is, as you well know, a matter of great concern worldwide. the way we fight money laundering ( ml ) and counter the financing of terrorism ( ft ), does not have an impact on us only, but also on our neighbours and any other country with which our citizens and companies perform trade and financial relations. in these last years, to this issue has been devoted considerable time and efforts by you, by albanian authorities and by international organisations. besides meeting each other again and exchanging opinions on general issues, i want to use this opportunity to share with you some thoughts about the importance of the existence of a culture against ml in the institutions we represent. i will refer in this case to banks, meaning non - bank financial institutions as well. following that, any consideration about ml will be valid also for the ft, for which i am convinced that our awareness and that of the public, is complete. with the term “ culture ” on anti - money laundering ( aml ), i refer not only to the existence in the bank of structures responsible for aml and its related procedures. i am aiming at the need for the existence in any bank, of a real concern and of a positive pressure to make sure that those structures and procedures are applied to their real meaning, throughout the institution and down to any single employee. at the same time, i mean the real willingness of the bank for a careful and proactive role in the inter - institutional relationships, with the aim of leaving away the formalism and qualitatively improving the process of aml. i will be focusing in more details on these issues, as i proceed. prior to proceeding with more details, allow me to put myself in each of your ’ s position. i feel i can do this, since i was one of you, as the executive director a commercial bank and head of the association of banks. we have shared common concerns about the speed and about the quality with which the legal requirements on aml were approved and implemented in practice. i still believe that a law is good when its requirements are applicable in practice and when they represent affordable costs for its subjects. i must say that the existing law on aml, needs to be revised under these considerations.