This measured was introduced in June 1991 with a rate of 20% that was raised to 30% in 1992. It was subsequently lowered to 10% in June 1998 and further down to 0% in September of the same year. Empirical evidence indicates that the reserve requirement had a small, short-lived effect on interest rates, probably because agents adjusted their portfolios toward longer maturities and found their way around the measure (Cowan and De Gregorio, 2007). The effect on volumes was also small, around 2% of GDP, with total capital inflows that amounted to nearly 27% of GDP in the period 1991–1997. No material effects have been perceived on the real exchange rate. Where a significant effect did occur was in the composition of total inflows: the share of short-term debt dropped dramatically as a percentage of total debt. However, financial fragility was not completely eliminated. Severe speculative attacks against the peso in 1998 showed that the reserve requirement policy did not isolate the economy from global financial turbulences (figure 9). Lastly, it is possible to contend that the reserve requirement did have significant distributive effects, because large firms continued to access the international bonds market directly to obtain long-term funding, while smaller firms could only access short-term banking loans, which were made more costly due to the reserve requirement.
Andrew will speak for the FCA, but speaking for the Bank, I can say we will:  4  All speeches are available online at www.bankofengland.co.uk/news/speeches  4  I. Ensure a strong focus on the markets’ transition to SONIA through the RFR Working Group and its Senior Advisory Group;  II. Continue and, if needed, intensify supervisory engagement on individual firms’ plans and  III. Continue to work together with other authorities internationally through the FSB; this is a global issue. To conclude, the time for ‘last orders’ is now. Firms need to be focussed on what they need to do to be able to transact SONIA based products; and stop adding to their post 2021 Libor exposures. There is a growing recognition across market participants of what transition entails. But we need to get the message to all Libor users – firms need to educate their customers. There is much to welcome in sterling markets but progress needs to accelerate. The developments in the sterling FRN market have demonstrated that change can be rapid once the conditions are right. But firms should not leave it to the last moment, relying on the efforts of others. Firms need to invest in the necessary changes now. 5  All speeches are available online at www.bankofengland.co.uk/news/speeches  5