Ensuring we have central bank tools that are effective: to backstop these new forms of systemic liquidity risk effectively, central banks need the right tools – to detect risks in a timely way; and to respond. In the LDI case, early warning required the use of qualitative as well as quantitative market intelligence. Effective response required the use of a buy/sell facility. Lending directly to non-banks would not have worked in this case. But it has many desirable properties for other scenarios, and is a high priority for future work. 4. Calibrating central bank tools to minimise risk: backstop facilities must be carefully designed if they are to be effective in removing the threat to systemic stability while minimising risks to the stance of monetary policy, to public funds, and to the incentives of market participants. In the LDI case, we sought to achieve that by grounding the objectives of the tool in restoring financial stability, targeting it on the parts of the market most in need of assistance, pricing it as a backstop to ensure we bought no more than needed, and ensuring it was strictly time limited, in its operation and in its unwind. The LDI operations were successful, but highlight many questions for the future. For me, three in particular stand out: Where do societies want to draw the line between public and private insurance against systemic liquidity in non-banks, and how do they ensure regulatory and central bank facility thinking develops in a co-ordinated way?
See for instance: Willem Buiter and Anne Sibert’s original MMLR proposals from 2007 (Maverecon Buiter's  Blog: Central banks in a time of crisis: a preliminary scorecard  - Willem  ; or The Central Bank as the Market  Maker of last Resort: From lender of last resort to market maker of last resort | CEPR ); Paul Tucker’s 2009 speech (The Repertoire of Official Sector Interventions in the Financial System: Last Resort Lending MarketMaking, and Capital - speech by Paul Tucker | Bank of England); Perry Mehrling’s New Lombard Street (The New Lombard Street | Princeton University Press (bis.org)  ); this 2014 BIS workshop (Re-thinking the lender of last resort  ); Yale’s New Bagehot project, launched in 2017 (The New Bagehot Project | Yale School of Management  ); and the G30 and Brookings post-Covid reports on enhancing US Treasury market resilience (Group of 30 :: Publication Details (group30.org) (brookings.edu)  and Enhancing liquidity of the U.S. Treasury market under stress  ). 6. Which gave Defined Benefit pension schemes leveraged exposure to gilt yields, hedging against upside risks to  Page 14 liability values in a low-interest rate world, while freeing up space for the schemes to hold riskier, higher-yielding but less liquid assets. 7. https://committees.parliament.uk/publications/30129/documents/174330/default/ . In the event, the LDI operations returned revenue of £ to the UK government. But positive returns cannot be guaranteed from such operations, and would not have arisen, e.g.