it may be a bumpy ride for a time. but there is one thing of which you can be absolutely sure. and that is that the monetary policy committee will continue to track all the evidence as it becomes available with the utmost attention ; and if it suggests that the overall economy is weakening unnecessarily, so that overall demand is falling short of our supply - side capacity to meet that demand, with the implication that inflation will fall materially below the government's symmetrical 2½ % target, then we will not hesitate to ease monetary policy further try to reduce that effect. that is what we are required to do ; and that is what we would anyway wish to do. the corollary, of course, is that as and when external demand recovers, we will be equally vigilant in ensuring that domestic demand is reined back to accommodate it! but that may be now somewhat further ahead.

the pandemic in a much stronger position than in 2008, with at least $ 1trillion in additional collateral against over the counter ( otc ) derivative exposures ; [ 2 ] and a significant increase of central clearing in otc markets. ccps in this period functioned as intended. very significant and sudden changes in asset prices did not lead to counterparty credit risk – actual or anticipated. there were no major clearing member defaults during the pandemic, so clearing was not tested to the limit. but there was no panic about counterparty credit risk, no ructions in the interest rate swap markets. uk ccps were able to provide clearing services without disruption. however, the episode highlighted a feature of the reformed system : in periods of stress, losses are realised faster. market participants are forced to post sufficient collateral that reflects the market volatility promptly. this is key to addressing the build - up of counterparty credit risk that had been at the root of the devastating global financial crisis. but it also meant that some market participants faced a liquidity crunch and a different type of panic as investors scrambled to get their hands on cash ( and particularly u. s. dollars ). margin calls in aggregate were large over the stress period. initial and variation margin increased significantly, with the increase in initial margin ( im ) at major global ccps totalling around $ 300billion in march 2020 and the increase in variation margin ( vm ) flows peaking at $ 140billion during the height of the stress in mid - march. central banks had to step in to restore market stability in a big way. over the course of 2020, g10 central bank balance sheets rose by $ 8 trillion. [ 5 ] had central banks not acted, the financial stability consequences could have been severe. russia - ukraine the first quarter of 2022 saw another episode of unprecedented volatility across financial markets as russia invaded its neighbour. once again, we saw shocks, this time in some commodity and energy markets. again, we saw big margin calls at ccps. losses ( and corresponding gains ) on derivative positions spiked across february and march 2022, primarily in markets experiencing the largest shocks. the margin exchanged to reflect those losses and gains ( vm ) across uk ccps in q1 2022 were larger than those observed during the 2020 covid crisis. uk ccps ’ aggregate initial margin requirements also increased, but by relatively less than we saw during q1 2020. [ 7 ]