And our balance sheet tools must evolve alongside it towards a “future normal”:   On the financial stability side, the experience of the Covid crisis, and the turbulent “dash for cash” that took place in financial markets in March 2020, when exceptionally high demand for cash led to a breakdown in the functioning of core financial markets, has raised questions of whether central banks need new tools for dealing with market dysfunction.12 (I will come back to this question later in the context of the impact that our QE purchases had).   On the monetary policy side, the Bank’s Monetary Policy Committee, which is responsible for deciding what monetary policy actions to take, has asked us to start “internal technical preparations to deliver the option of a tiered system of reserve remuneration that could be ready to be implemented, should it be judged appropriate, alongside a negative Bank Rate”.13    Looking further ahead central banks around the world are grappling with the question of whether to provide the public with electronic money, or Central Bank Digital Currency, and the challenges and opportunities that such a decision could throw up in a possible “future normal”.14  Set out in Mark Carney’s speech ‘The UK at the heart of a renewed globalisation’ I described the evolution of these tools in my 2018 speech “Finding the right balance”. As set out in Andrew Hauser’s speech “From Lender of Last Resort to Market Maker of Last Resort via the dash for cash”.
The depreciation of the RMB, alongside a pullback of foreign funds from the region, triggered downward pressures on the region’s currencies. Since the RMB move on 11 August, Emerging Asia currencies have depreciated by an average of 3.2% against the US Dollar, with some falling by as much as 7%. 2  While markets seem to have calmed somewhat, a sense of uncertainty prevails and the risk of renewed volatility remains. What is happening? Financial markets are essentially coming to terms with four significant “re-pricings”. •  First, the stock markets in China are adjusting downwards from unsustainably high levels. •  Second, the RMB has become de-coupled from the US Dollar and is moving towards a more market-determined exchange rate. •  Third, oil and commodity prices have eased considerably this year, marking the end of what some have called a “super-cycle”. 1  Emerging Asia economies refer to China, India, Korea, Hong Kong, Taiwan, Singapore, Thailand, Malaysia, Indonesia and the Philippines. 2  Excluding the Hong Kong Dollar. BIS central bankers’ speeches  1  •  Fourth, the effects of an impending interest rate hike in the US – the first after seven years of extremely easy monetary policy – are being priced in across Asian markets. These are not necessarily unwelcome developments. The correction in China’s stock market is not surprising given the stretched valuations that had developed over the preceding year.