There are some profound differences between central bank risk management and that in the private sector: in particular, the lack of a hard financial constraint, the inverted risk tolerance in times of stress and the dominant influence of policy imperatives. But there are also many areas where we have been able to gain enormously from the straightforward adoption of best-practice market techniques, including stress testing, risk tolerance and limit structures, and a wide range of risk review standards. What are the next challenges? As I alluded to before, risk managers and CROs in commercial firms are upstream from us in the chain of defences in the global financial system. This means that the more you can do to throw light on your organisations’ potential liquidity needs under stress, and the potential mitigants for that stress, not only will it help you and your supervisors, it will also help central banks to be better watchmen for tail events, and more effective firefighters if the building ever needs to be evacuated. My second main message is that, we are also members of the wider risk management community, dealing with similar concepts and sometime identical products, but with a different perspective. So we look forward to a rich and ongoing dialogue with you as you develop better and more robust ways to manage and diversify risk. 15  All speeches are available online at www.bankofengland.co.uk/speeches  15
In other words, in the absence of further disturbances to the economy or the emergence of new and unanticipated threats to price stability, this level of interest rate is considered to be consistent with the primary objective of maintaining price stability over the medium term. Our announcement helped to resolve some uncertainty at a time when the practical, technical and logistical tasks required by the changeover weekend were uppermost in our minds and in those of market participants. The first main refinancing operations of the Eurosystem were successfully settled. While paying due attention to the uncertainties related to the phasing-in of the new system, the decisions were taken on the basis of the liquidity conditions prevailing in the euro area money market as a whole. In addition to the refinancing operations, the Eurosystem offers standing facilities, which can be accessed by credit institutions via the NCBs. The deposit and marginal lending facilities constitute, in normal circumstances, the upper and lower bound for the overnight market interest rate. As a transitional measure, the Governing Council of the ECB had narrowed the corridor established by the interest rates on the Eurosystem’s standing facilities from 4 January until 21 January 1999. The intention was to facilitate the necessary adjustments to the new institutional environment resulting from the transition to Stage Three. BIS Review 9/1999  –6–  At its last meeting, the Governing Council of the ECB confirmed its earlier assessment of the outlook for price stability.