how we are utilising the bank ’ s balance sheet to support financial stability. much of this will be familiar. you ’ ve heard a lot from me and my fpc colleagues throughout this year, but it bears repeating given what it implies for existing and new vulnerabilities and risks to continued financial stability, which the fpc and the bank are managing. lessons from 2024 – developments in market - based finance if i was going to pick out one theme to describe 2024, it ’ s the continued transition of activity to non - banks, particularly in some core markets. non - bank financial institutions ( nbfis ) encompass all financial institutions that are not banks, central banks or public financial entities. it means they are a heterogeneous group of financial intermediaries with widely differing business models, varying from pension funds and insurance companies to hedge funds and money market funds. as has been well documented, their role within the financial system has increased rapidly since the global financial crisis, with non - banks now accounting for around half of the total assets in both the uk and global financial systems. nearly all of the increase in net borrowing by uk business since the global financial crisis has come from market - based sources rather than direct bank lending, and market - based lending now accounts for 56 % of the £1. 4 trillion stock of uk corporate debt, as shown in figure 3. figure 3 : composition of stock of uk corporate debt as of 2024 q2 sources : bank of england, bayes cre lending report ( bayes business school, city university of london ), deloitte, eikon from refinitive, financing & leasing association, firm public disclosures, lcd a part of pitchbook data inc., ons, peer - topeer finance association and bank calculations. data as of 2024 q2. one square represents approximately £14 billion. there are 100 squares, each representing 1 % of the total current stock of uk corporate debt, rounded to the nearest 1 %. debt securities include bonds, private placements, and commercial paper. non - bank loans to large corporates includes lending by securities dealers and insurers, non - monetary financial institution syndicated loans, asset finance provided by the non - bank sector, and direct lending funds. these data are for private non - financial corporates using ons consistent national accounts definitions, and excludes public, financial, and unincorporated businesses. the bank has previously set out the reasons for,

yields have declined. significantly, the decline in yields in the underlying government bond markets has typically more than offset the widening in spreads faced by lesser credits. in the us corporate bond market, for example, bbb spreads widened over the year from around 75 basis points to around 140 basis points, but because of the underlying fall in yields, yields paid by bbb borrowers actually fell from around 6½ % to 6 %. similarly, in the sterling market here, lower grade spreads widened from around 80 basis points to over 150 basis points but yields paid fell from just over 7 % to around 6 %. the result has been a notably effective contribution by the bond market to meeting the financing needs of the corporate sector. the past year has, also, in a real sense been the year of europe. in any event, the prospect then advent of the euro was undoubtedly a major factor driving the increase in bond market activity. issues by european borrowers accounted for some 25 % of the total, and issues in european currencies rose to nearly 30 %. many issuers took the opportunity to issue tributary or parallel bonds which were fungible with the launch of the euro. others offered large benchmark issues with provision for redenomination into the euro. in parallel, 1998 saw a further rapid expansion in the volume of equity issuance by european names, fed partly by privatisation sales, but reflecting also increased corporate use of the equity market to finance expansion and acquisitions. even more remarkably, merger and acquisition transactions in europe rose nearly 50 % in 1998, continuing a trend which has seen this area of activity increase by around 35 % a year over the past five years. – 2 – moreover, january 1999 has by all accounts started the new year in an even more active vein, with a very high volume of bonds issued, and with the euro accounting for over a third of the total. in part, this no doubt reflects the fact that the euro is, for the moment, the new kid on the block which everyone wants to meet. but more fundamentally it is a clear vote of confidence in the new currency that such international interest should already be apparent in borrowing and investing in the euro, and in adapting and rebalancing portfolios to take account of this major change in the structure of the capital markets. a hugely important contribution to this process has, of course, been the vast exercise to prepare conventions, processes and systems for the euro, both within firms and in the shared market infrastructure