, one area where the scheme has certainly been effective is the pace of purchases. last week, and just four months since we started purchases, we passed the half - way mark for these purchases. this is faster than we expected at the outset, perhaps because the auctions have acted to boost secondary market liquidity by more than we had allowed for. so far our approach to setting reserve spreads has also successfully driven the bank ’ s holdings towards our ‘ sector key ’ ( chart 9 ), and i am confident it will continue to enable us to make our purchases in a neutral manner across economic sectors. so while our purchase pace will continue to depend on the nature of the offers we receive, and portfolio matching constraints are likely to become more binding as we near the purchase target, it seems probable that the bank will be able to complete the purchase programme faster than we thought possible to begin with. conclusion in concluding, i hope my remarks have helped demonstrate that a detailed understanding of market structure is a core part of effective central banking. from the experience of 2016 i ’ d draw two specific lessons. first, so long as central banks design their operations carefully, drawing on study of the relevant market structures, they retain the capability to broaden the range of policy tools at their disposal. the early success of the corporate bond scheme – both in effectively purchasing the bonds and in terms of initial evidence about the transmission to wider economy of those purchases – underscores the continued scope for central banks to innovate when circumstances dictate that need. notwithstanding the success of foreign exchange markets in processing the initial referendum news, the second lesson comes from the flash crash. it emphasises that central banks need to deepen their understanding of the features of modern market structures that exacerbate these vulnerabilities and why they seem to be occurring across a broader range of markets. in particular, we need a deeper understanding of the potential for flash events to have longer - lasting consequences than has been the case so far. that would increase the potential systemic costs of flash events and increase the case for some form of public policy response. in the bank ’ s context that helps explain why the financial policy committee is seeking to examine the potential implications of these developments for financial stability. i am sure that there are many broader lessons from 2016 that omfif will help us all work through, and look forward to benefiting from those insights, but for now, thank you. all speeches are available online at www. bankof

- upon spike on 30 december in the euro - us dollar exchange rate. see box on page 9 of the bank ’ s august 2016 inflation report. http : / / www. bankofengland. co. uk / publications / pages / inflationreport / 2016 / aug. aspx all speeches are available online at www. bankofengland. co. uk / speeches in auctions we offer to buy across the range of eligible assets the mpc has specified, pre - define the mechanisms we will use to weigh the competitiveness of offers, and then passively respond to the pattern of bids that we receive in any given auction. our judgement last summer was that the mpc ’ s corporate bond purchase objective would probably also be best achieved using auctions, but that we would need to make a number of changes relative to the pre - existing gilt auction design to cater for the differences in the underlying markets. let me highlight this by explaining three of the main, mutually reinforcing, changes that we made, informed by auction theory and expert advice. first, the size of our purchase operations were designed to be flexible, adjusting automatically to reflect the quantity and quality of the offers received. this means the purchase pace can fluctuate to account for seasonality, market conditions and so on. it also encourages greater competition between offers, as some offers are likely to be rejected, even in auctions where there are a smaller total number of offers. by contrast our gilt purchases are made at a pre - announced pace through fixed - size auctions. second, we changed our allocation method within our auctions with the aim of promoting participation and competition. experience has shown that the competitive nature of the gilt market routinely delivers widespread participation in our auctions. as the level of competition in the corporate bond market is much lower, a key priority in the design of these operations was to encourage strong participation from market makers. accordingly we decided to adopt a uniform pricing method for these auctions, in which the bank pays the same ( highest ) price for all the accepted offers to sell us a given bond. our judgement, was that this approach would help incentivise participation and therefore competition, as participants do not need to make firm judgements about the overall market level, but can instead focus on their own valuations. this effect may be particularly important for increasing the likelihood of smaller or less informed market participants taking part. this increased participation should in turn increase the likelihood of