Managing the Central Bank's Balance Sheet: Where Monetary Policy Meets Financial Stability

Abstract

In this lecture, Paul Tucker sets out the analysis underlying the Bank's announcement on 22 July of major reforms to its operations in the sterling money markets. He outlines the problems with the current framework and goes on to argue that the new system represents a fundamental change in how the Bank thinks about the implementation of monetary policy, the lubrication of the wholesale payments system, and the provision of liquidity insurance to the banking system, all of which are facets of the management of central bank money and the central bank's balance sheet.