are as important as those of labour markets for our shared prosperity. in response to these painful lessons, the bank of england has been bestowed with enormous new responsibilities by parliament. they now span monetary policy, macroprudential policy, and microprudential supervision. they include responsibility for the united kingdom ’ s bank notes ; its payments systems ; oversight of financial markets infrastructure and resolving failed institutions. to help fulfil its mission the bank has core roles in europe, at the g20 and at the financial stability board. in ch. 24 of keynes, j m ( 1936 ), the general theory of employment, interest and money, macmillan cambridge university press. bis central bankers ’ speeches having monetary, macroprudential, and microprudential policy under one roof makes gains from trade possible. it is our duty to exploit complementarities, synergies and economies of scope to maximise our impact by working together. to do so, we need research. and to some extent, research needs us. the need for research the way central banks have sought to achieve their objectives – the practice of central banking – has frequently moved ahead of the theory of central banking. theory, in turn, subsequently catches up, and enriches and refines practice. the history of central banking is replete with examples. tacit knowledge has often been more instrumental in determining policy outcomes than insights from formal research. sometimes this works, as in bagehot ’ s “ dictum ” ( to lend freely at a penalty rate against good montague norman ’ s “ never explain, never excuse ”. 2 research has meant that some modes of operation, like norman ’ s, have rightly fallen by the wayside. it has helped nuance others, like bagehot ’ s. and it guides us as to which practices to retain, reinforce and enhance, and which should be discarded. the practice of monetary policy in the great moderation is another example. it informed theorising and research on inflation targeting. and, in turn, through trial, error and refinement, research has helped inform policy with empirical insights and workhorse models. in the theoretical space, this process led to woodford ’ s dictum that in modern central banking very little else matters beyond expectations. 3 in contrast, the practice of central banking in a messy real world where people use various heuristics, including rational inattention, has shown the limitations of such logical extremes. research showed how

work in theory. ” understanding better the transmission mechanisms of qe, and the extent to which they are state dependent, can provide enormous insights to its effectiveness as a policy tool specifically, as well as the formation of agents ’ expectations and the functioning of financial markets more generally. recent innovations have not been confined to new tools. as i noted previously, better communication and greater transparency has also made policy more effective. transparency has taken centre stage as policymakers sought to restore confidence in the financial system, as they conducted and published stress test results to create more transparently resilient banks ; and as they gave guidance to clarify their reaction functions. recently, research informed the recommendations of the warsh review into what we could do to enhance monetary policy transparency here at the bank of england. this research theme continues in that vein by asking what more might be done to enhance effective transparency in all areas of policy. the fourth research theme covers “ new data, methodologies and approaches ” increasing amounts of data – structured and unstructured, current and historical – are available on almost every aspect of the economy and the financial system. that holds great promise. computing power has transformed our economies ; it needs now to be harnessed to transform our understanding of them. theoretical and methodological techniques continue to advance. in some cases that will mean measurement ahead of theory. that is one way to advance. in the short term, a black box could be better than none, and with time the patterns it reveals could prompt a greater understanding of the underlying forces. recall that kepler needed to uncover the empirics of planetary motion before newton could conjure the theory of celestial mechanics. it is important to exploit developments in advanced analytics of large data sets to formulate better policy. they ’ ll improve our understanding of household and corporate behaviour, the macroeconomy and risks to the financial system. they need to be harnessed to enhance our forecasting and stress testing capabilities. to complement this theme, we will release historical data sets including detailed breakdowns of the bank ’ s inflation expectations survey, our agents ’ company visit scores, and very long back - runs of key economic and financial variables. this is one of the ways we will look to increase the permeability of our research. we are seeking also new ways to visualise and analyse the increasingly rich information sets that are available. the fifth and final research theme covers the “ response to fundamental changes ” fundamental technological and structural trends will have a significant bearing on