a list of bonds, or sell from our stock. after reaching a peak in 2010 of some £1. 5bn in holdings, the revitalized market has steadily bought the bonds back from us so that our stock is now only around £20mn. curiously, we still get people advocating the purchase of corporate bonds in large scale as well as gilts. but it is not clear to me what this would be intended to achieve. apart from the simple fact that the bank is already in the market every week offering to buy corporate bonds, and we have been doing that for nearly four years, this aspect of the capital markets is functioning well in terms of providing credit to businesses. any firm that has an issuance programme – typically the larger firms with credit ratings – can issue whenever and whatever bonds they choose at historically low interest rates. the backstop to corporate bonds provided by the bank ’ s operations is still there – but it is not being used much because it is not needed. the power to intervene in credit markets is one to use cautiously. any intervention by the public sector carries the risk of creating distortions. usually, we intervene because there is a demonstrable failure of private markets – so that the central bank is undoing distortions caused by other factors. buying private sector paper also carries the risk of credit losses – ultimately of public money. and it is a very short step to cross the boundary from seeking to improve credit supply generally to determining the credit allocation between individual borrowers – which the central bank is neither equipped nor empowered to do. that is best left to private markets. when a central bank – or any public authority – takes actions, it has to remember that the precedent of that action can be as powerful as the action itself. market participants – and indeed the general public – will learn about the authorities ’ behaviour and shape their own for more information, see “ the corporate sector and the bank of england ’ s asset purchases ” available at : http : / / www. bankofengland. co. uk / publications / pages / speeches / 2010 / 423. aspx bis central bankers ’ speeches accordingly. moral hazard is one aspect of this – that can lead to market participants taking more risky actions because of the perceived backstop provided by the central bank. more generally, communications strategies can be a positive part of the toolkit, in particular by giving out information about the central bank ’ s monetary policy “ reaction function ”. for the most part it

, middleincome countries benefited from the introduction of the more favourable houston terms in 1990. when it became clear that even the more concessional debt rescheduling and reduction mechanisms were still not sufficient to attain sustainable external debt levels, particularly in a number of african low - income countries, another key policy initiative was launched in 1996 by the imf and the world bank : the heavily indebted poor countries initiative ( hipc ). under this initiative, the entire international community, including some multilateral institutions, decided to take coordinated action to reduce the debt burdens of eligible countries to sustainable levels. in this context, paris club creditors agreed to increase the reduction in the net present value of eligible debt up to 80 % under the lyon terms and, in 2000, up to 90 % or even more under the cologne terms. the financial implications of these decisions were substantial : around 36 % of the initiative ’ s total cost, amounting to usd 38 billion thus far, has been borne by paris club creditors. finally, the hipc initiative has been supplemented in 2005 by the multilateral debt relief initiative, which allows for 100 % debt relief by multilateral institutions for countries completing the hipc process. this marked a major break with the principle of preferred creditor status of international financial institutions. looking at the most recent past of the paris club, another development worth noting is that the number of countries rescheduling with paris club creditors has been declining significantly. besides the more general macroeconomic developments i recalled at the beginning of this talk, this desirable trend is also due to two more specific developments : first, the more comprehensive debt stock treatment of low income countries ; and second, a graduation from rescheduling of most middle - income countries as a result of the implementation of economic reforms that have increased their access to market financing and thus private creditors. indeed, while official flows to emerging markets were dominant in the 1980s, reaching on average over 60 % of total flows, the 1990s saw a dramatic increase in private flows, which on average accounted for around 85 % in the period from 1990 until 2003. accordingly, the paris club has been paying increasing attention to coordination with private sector creditors. in particular, early discussions can be scheduled when the proportion of private external debt is deemed significant and when comparability of treatment is an issue. also, interaction between paris club creditors and private sector representatives can be initiated if private creditors indicate their willingness to help restore debt sustainability in good faith and if a