economy. into this changed landscape ron kalifa published his independent fintech strategic review earlier this year. 4 the bank welcomes this report, which provides a timely opportunity for us to reflect on our role and how ron ’ s recommendations fit with our work to support safe innovation. so how do we see our role in the fintech landscape? at its most basic, i would say that private - sector innovation relies on public - sector foundations. alongside other uk authorities and international bodies, the bank is proud to provide the infrastructure on which private sector innovation can flourish – whether that is ‘ hard infrastructure ’, when the bank, or public sector, provides core parts of the system directly, as with our real - time gross settlements ( rtgs ) service ; or ‘ soft infrastructure ’, meaning the regulation, laws, rules, and standards set by the public sector on which private companies rely. the bank stands ready to provide the right type of infrastructure depending on the situation. sometimes the bank will need to be in the lead, sometimes it will work as part of a coalition of public organisations. https : / / www. bankofengland. co. uk / - / media / boe / files / speech / 2019 / embracing - fintech - speech - by - dave - ramsden. pdf https : / / www. bankofengland. co. uk / - / media / boe / files / report / 2019 / response - to - the - future - of - financereport. pdf? la = en & hash = 34d2fa7879cbf3a1296a0be8dcfa5976e6e26cf0 https : / / www. bankofengland. co. uk / speech / 2020 / dave - ramsden - speech - public - lecture - for - university - of - nottingham https : / / www. gov. uk / government / publications / the - kalifa - review - of - uk - fintech all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice sometimes we ’ ll work in collaboration with the private sector, and sometimes our role will be to act more as a ‘ critical friend ’. and sometimes, as with rtgs, that will mean timely upgrades to critical technology, while at other times it can mean working right at the cutting edge, as with our work on central bank digital cu

which will take the total sum bought to £325 billion. to give you some context, that represents about a fifth of the annual output of the united kingdom and around a third of the total stock of uk government debt in issue. why did we decide to inject further monetary stimulus into the economy? and how likely is it to be effective? we started quantitative easing in march 2009 in the aftermath of the collapse of lehman brothers, as the uk economy was undergoing its deepest post - war contraction. bank rate was almost as low as it could go and further stimulus was necessary to put a floor under demand and get the economy growing again. all told we bought £200 billion of gilts during that initial phase of quantitative easing. quantitative easing essentially involves trading one liability of the state – gilts – for another – monetary claims on the bank of england. we aim to buy mainly from non - bank private financial institutions, such as pension funds and insurance companies, not from the bis central bankers ’ speeches banks, as is sometimes erroneously claimed 1. when we buy a gilt, we simply credit the bank account of the seller with an appropriate sum. if the seller were indifferent between holding the gilt and holding the associated bank deposit, that is where things would stop. but because deposits tend to yield less than gilts and assets such as corporate bonds and equities, the seller is likely to want to buy some other asset instead. the consequence is upward pressure on the prices of a whole range of assets, including corporate bonds and equities. that increases the availability, and reduces the cost, of finance to corporates. it also boosts the value of people ’ s wealth, which should encourage more spending. as i noted a moment ago, we aim to acquire the gilts from institutions other than banks. but as a by - product of the purchase, banks will find that they have both more customer deposits and an increase in their claims on us ( what are known as bank reserves ). that may encourage them to increase their lending, though in the particular circumstances prevailing during and after the financial crisis, we expected this effect to be quite weak. that is in line with the observed weakness in bank lending over the past three years. our analysis of the first phase of quantitative easing suggests bond yields were around one percentage point lower than they would otherwise have been. and uk equity prices rose 50 % during the programme, though only a small part of that is likely to be down to quantitative easing