is contributing to a sharp deterioration in our balance of payment and a fall in the net external component of aggregate demand. at the same time, the strong exchange rate, and the weakness of world commodity prices, is having a direct dampening impact on costs and prices in this country - particularly at the wholesale, producer, level but also affecting retail prices. meanwhile the domestic economy has been unsustainably strong. private consumption, in particular, was growing at an annualised rate of over 5 % last summer, and still growing at an annualised rate of 4 % by the first quarter of this year. this compares with a longer - term trend rate of some 2½ %. but for the dampening impact of the external influences on aggregate demand and on costs and prices, this could already have resulted in accelerating inflation. the complication for monetary policy, in this situation of external / domestic imbalance, has, of course, been that a tightening of monetary policy to slow the pace of the domestic economy would have been likely to aggravate the appreciation of the exchange rate, intensifying also the restraining external demand and price effects, and putting even more intense pressure on the internationally exposed sectors. now, there is no question but that the strength of the domestic economy must moderate further - as indeed we expect that it will. but the external influences - which we can anyway not do much about, but which will in time wear off - made this moderation of domestic demand growth less immediately urgent than it would otherwise have been. in these circumstances, with some evidence that growth in the domestic economy was in fact slowing, and given the evident pressures on the internationally exposed sectors, we needed, in my view, to be more than usually confident in our judgement as to the need to tighten policy further. the questions with which the mpc has been struggling this year then are : just how much shelter the external situation would in fact give us, and for how long ; and just how much time, therefore, we had to bring about a sufficient slow down in domestic demand to prevent inflation accelerating and the economy from overheating. now these are immensely difficult judgements. they depend in part upon one ’ s perception about the starting position - that is how close we are to full capacity utilisation to begin with. and they depend upon not just the direction, but the rate of change and the timing, of changes in the different components of aggregate demand. it is hardly surprising that the various members of

are indeed achieving their objectives. we are moving to a world in which g - sibs can be global in life and orderly in death. we think that we are getting closer to a solution to the problem framed by mervyn king. we have an internationally coordinated response grounded in national law. by pre - positioning loss - absorbing resources in life, and planning for an orderly resolution in the event of failure, we can provide the policymakers who come after us with more options than they had in the great financial crisis if they are faced with future systemic financial stress. 3 / 4 bis central bankers'speeches there is, of course, more to do. the benefits of reforms cannot be realized unless they are operationalized. all fsb jurisdictions need to implement resolution reforms and to improve their resolution capabilities so they are fully prepared to respond to a bank failure or a crisis. the fsb ’ s evaluation shows that systemically important banks remain very complex, highlighting the importance of resolution planning. the evaluation also highlights gaps in the information available to public authorities and to the fsb and standard setters, which reduces their ability to monitor and evaluate the effectiveness of resolution regimes. the fsb continues its work to ensure that banks, other financial institutions and market infrastructures can be effectively and safely resolved. these are issues on which we will need to reflect and work further. the financial landscape is also changing, and the fsb needs to be responsive. the fsb ’ s monitoring shows that the share of bank assets as a percentage of total financial assets has dropped from 46 percent in 2008 to 39 percent in 2018. as non - bank financial institutions increase their market share, risks have moved outside the banking system. the market turmoil in march underlines the need to better understand the risks in non - bank financial intermediation and reap the benefits of this dynamic part of the financial system without undermining financial stability. there may be lessons for us to learn about the framework that we need to apply to this sector, which is different from — and less developed than — the one used for banks. at the fsb, we established earlier this year a balanced working group of bank and nonbank authorities to look closely and concretely at these issues, and the covid event has given focus and vitality to this effort. separately, we have already announced that our next evaluation will examine the postcrisis reforms to money market funds, which were once again front and center in the covid event. finally,