yes ”. since that forecast was completed things have gone in different directions. the prospect for external demand has somewhat weakened and so too has the oil price. there are mixed messages relating to tightness in the labour market, but earnings growth has so far remained reasonably well contained - as it must continue to do. on the domestic demand side, private consumption growth has remained stronger than we had supposed, while the growth in private investment has been weaker ; meanwhile it is not clear that underlying public sector demand has – at least yet – picked up as rapidly as planned. the exchange rate has fallen, and so, too, have market interest rates. i would not venture to suggest how these – and all the other developments we look at – will influence our next forecast in february ; and it would be pointless to anticipate possible future policy decisions. i would be surprised if they radically altered the broad prospect of relatively steady progress over the next two years. but i can assure you of one thing : if the prospect – or the balance of risks around it were to change significantly – either in the context of our february forecast or subsequently – we will promptly react to that change. despite the fact that we left interest rates on hold again last week, we have certainly not gone to sleep! we cannot guarantee that we will always remain as close to the symmetrical inflation target as we have been in recent years – the uncertainties as i have explained are too great for that degree of confidence. but that remains our aim. and i will be happy to report back to you again at your next dinner. let me, mr president, just conclude by congratulating you and the chartered institute on your achievements – not just over the past two years though i do congratulate you on that, especially, if i may, on your introduction of your new chartered banker qualification. but i congratulate you more broadly on your achievements over the whole 125 years since your foundation. and let me invite all your guests now to rise and to join me in wishing you well over the next 125 years. ladies and gentlemen, please join me in a toast to the continuing achievements of the chartered institute of bankers in scotland.

independent shadow banks even where a shadow bank is not de facto or de jure part of a banking group, many are fundamentally dependent on banks – through committed lines of credit. anyone running a maturity mismatch is exposed to liquidity risk – liabilities being called before assets fall due or before they can be sold in an orderly way. banks can provide insurance against such liquidity risk because their deposit liabilities are money ; they can lend simply by expanding the two sides of their balance sheet simultaneously, creating ( broad ) money. but, for the system as a whole – ie taking a macroprudential perspective – providing committed lines to shadow banks is riskier than providing such lines to non - bank businesses. shadow banks are liable to call on their lines just when the banking system is coming under liquidity pressure itself. that should be reflected in regulatory policies on banks ’ liquidity exposures. i suggest that : the draw - down rate assumed in the basel 3 liquidity coverage ratio should be higher for committed lines to financial companies than for lines to non - financial companies. that is, banks should hold more liquid assets against such exposures. without a policy of that kind, there will be a strong incentive for maturity - transformation to be undertaken off bank balance sheets but with an umbilical cord back to the banking system. it should apply not only to vehicles used for securitisation but more generally. money funds money funds do not use committed lines of credit from banks. claims on money funds have, in effect, become monetary assets in the hands of savers. in parts of the world, especially the us, they are treated like current accounts. given the restrictions on their asset holdings, they resemble narrow banks, in mutual - fund clothing. but for a normal mutual fund, as an open - ended investment vehicle, the value of investments in it fluctuates with the value of the vehicle ’ s asset portfolio. by contrast, most money funds hold themselves out as offering par under any circumstances ; when they “ break the buck ”, they must unwind. their investors run at that prospect ; and so the funds themselves are flighty investors. compared to most types of shadow banking, money funds do not borrow – in the usual sense. but by promising par, they are in effect incurring debt - like obligations. and they can be exposed to leverage. at least in the run up to the crisis, some invested in levered paper, some of it in