symptoms of financial market fragmentation. addressing their root causes required stronger banks, a more resilient financial system, solvent governments, and the delinking of bank and sovereign credit risk. on the two of these imperatives, the eu has made welcome progress, with the establishment of the single supervisory mechanism and the european systemic risk board. these bodies are helping address a classic collective action problem by overcoming the inevitable temptation of national supervisors to ringfence liquidity and capital within national boundaries to the detriment of a single market for capital. alongside improving the transmission mechanism, the ecb made important advances in the conduct of monetary policy. it has reduced the effective lower bound on policy rates and created additional stimulus through forward guidance, new lending facilities and innovative asset purchase programmes. these actions have helped shape the expectations of both market participants and the general public. the challenge now facing the ecb – and monetary policy makers more broadly – is to provide sufficient stimulus to meet its price stability objective when powerful structural forces are pushing down equilibrium interest rates. as i noted at jackson hole, 3 the risk of a global liquidity trap puts a high premium on getting more than just monetary policy right. in a global liquidity trap, central banks cannot be the only policy makers who do “ whatever it takes. ” there are clear gains from coordination, with other policies – particularly fiscal policy – having important roles. the biggest gains would come from lowering trade tensions. this is pushing up hurdle rates on investment, swamping the impact of lower policy rates. reducing uncertainty would turn a vicious cycle – in which falling equilibrium interest rates eat into policy space, exacerbating downside risks and pushing down equilibrium rates further – into a virtuous one, of rising equilibrium rates, increased policy space, and stronger global growth. “ the growing challenges for monetary policy in the current international monetary and financial system ”, speech by mark carney at the jackson hole symposium 2019. all speeches are available online at www. bankofengland. co. uk / news / speeches iii. transforming payments during benoit ’ s time at the ecb, the public provision of money has faced challenges from bitcoin to stablecoins. the bank of england has an open mind but not open door when it comes to such innovations. unlike social media, for which standards and regulations are only now being developed after the technologies have been adopted by billions of users, the terms of engagement for any new systemic private payments system must be in force well in

. as benoit noted, this may require central banks to provide more liquidity in aggregate, including by widening access to their balance sheets. prompted by the potential risks that come with brexit, the bank of england has come to a similar conclusion : we are already running weekly auctions in sterling, us dollars and euros that could be used to absorb pressures as they arise. we also have a contingent term repo facility that we could activate at a higher frequency if needed ; and we – like the ecb – can lend to a very broad range of counterparties against a wide range of collateral. central banks and regulators must also be clear that liquidity facilities and buffers are there to be used. for example, in october, the bank clarified our supervisory expectations to re - emphasise our commitment to providing liquidity in the ordinary course of business. we do not expect firms to justify any usage, nor is there any presumption they would use their own buffers before our facilities. next year ’ s first system - wide liquidity stress test will be another opportunity to demonstrate that liquidity buffers are fully useable. increased central clearing would be a capital - efficient way to further improve repo market liquidity ; this would be most effective if smaller institutions participated directly. and a more holistic approach by firms to internal capital management would make them more agile, including not applying the leverage ratio at the desk level. all speeches are available online at www. bankofengland. co. uk / news / speeches liquidity concerns also go to the heart of otherwise immensely positive developments in market - based finance. as is the case for banks, the institutions at the heart of market - based finance, particularly open - ended investment funds, must prudently manage their leverage and liquidity. mismatches between redemption terms and the liquidity of some funds ’ assets means there is an advantage to investors who redeem ahead of others, particularly in stress. this has the potential to become a systemic risk as first mover advantage could prompt a de - stabilising rush to the exits. in response, the bank of england and the fca have decided that there should be greater consistency between the liquidity of a fund ’ s assets and its redemption terms. specifically : the liquidity of funds ’ assets should be assessed either as the price discount needed for a quick sale of a vertical slice of those assets or the time period needed for a sale to avoid a material price discount. investors