But the moves are still small relative to those we saw ahead of the Referendum. On a day-to-day basis, we continue to use our balance sheet in support of monetary policy and financial stability. Our regular market operations will continue to keep market rates anchored to Bank Rate, and we will continue the programme of gilt reinvestments that maintains the stock of APF purchases at its target level for as long as the MPC choose to maintain it there. And our monthly Indexed Long-Term Repo liquidity facility continues to see regular usage, with £ allocated in September’s operation. Looking further ahead, the TFS is now closed to new drawings, and will gradually unwind in the coming years as banks repay their loans. In June the MPC gave updated guidance that it will not reduce the stock of asset purchases until Bank Rate reaches around 1.5%, and any decision on what happens then will of course be a decision for the MPC of the time and will depend on the economic circumstances prevailing at 28  the time. As and when our balance sheet shrinks, it is likely that its size will return to being determined by the level of SMF participants’ demand for reserves (as well as the amount of banknotes in circulation), rather than by the quantity supplied.
7  All speeches are available online at www.bankofengland.co.uk/speeches  7  One of the lessons of the crisis and the ensuing ten years was that we need to continuously challenge ourselves to ensure that we are prepared for the future. The Bank has taken that to heart. Today I want to highlight two innovations. First, the Bank has recently supplemented the ability to provide liquidity to our expanded set of members by ensuring that we are operationally capable of accepting equity collateral, should the need ever arise. And, second, in pursuit of a more diverse and resilient financial landscape in the UK, we have been progressing work to enable Islamic banks to hold Bank of England reserves to meet their regulatory requirements for holdings of high quality liquid assets in a way consistent with Islamic commercial jurisprudence. And as a result, today I can announce that we will shortly be establishing a new subsidiary of the Bank, to house the Shari’ah Compliant Facility; this will be a special purpose vehicle, called the Bank of England Alternative Liquidity Facility (BEALF). This will also be the first non-interest based liquidity facility to be offered by a major Western central bank, providing important structural support to the UK’s Islamic finance sector, and further strengthening the UK’s position as an international financial centre. 22  Enhancing our policy readiness  With all of this capability comes the need for accountability. We are running a much larger balance sheet than ever before.