10  Quinn and Roberds (2005). 11  Ferguson (2008). 12  Bagehot (1873). BIS Review 107/2010  3  a price set by a market. These innovations also spread to Northern Europe and, by the mideighteenth century, London had a well-developed bond market.
Having opened up the possibility that policy rates can turn negative has also contributed to flattening the whole yield curve, by removing the upward bias to yields that came from the perception that rates could only go up, not down. Indeed, we have stated unambiguously that policy rates would remain at current levels or lower for an extended period of time.