That is why no-one is forced to cast their vote for a particular level of Bank Rate until they have heard the views of the whole Committee. As a result, there is often some suspense as to the final outcome. In January, for example, when the Committee raised Bank Rate by five votes to four, that outcome looked unlikely when at one stage opinion was four to two for no change with only three people to speak. The greatest debate among the Committee usually occurs during the quarterly forecast round which often stimulates fresh thinking. So it is perhaps not surprising that this is when many, but by no means all, changes in interest rates are decided – see chart 6. Changes have been twice as frequent in Inflation Report months as in other months. But it is changes in economic conditions which are more important in determining the timing of our decisions. 7  Including one emergency meeting following the events of September 11 2001. 8  On 20 occasions the MPC has met with fewer than the full complement of nine members. 12 of those occasions were before the Bank of England Act came in to effect and the ninth member could be appointed. Since June 1998 it has also been short of its full complement on 8 occasions. 9  The role of uncertainty and learning in monetary policy was discussed in my 2005 Mais Lecture. See King (2005).
But there is a need also to reduce vulnerability by building bigger, deeper, more robust and diversified capital markets. While the interesting subject of monetary integration, which would provide a long-term solution, has been receiving some nascent attention, efforts to enhance the efficiency of financial intermediation within the region should be stepped up. Asia as a whole is one of the largest exporters of capital and, at the same time, also one of the largest recipients of foreign direct investment and foreign portfolio investment. The underlying process of capital flows associated with this roundabout phenomenon involves much greater financial volatility and instability for the region than the situation where a greater proportion of savings in the region could more readily find their way into investments in the region. This underscores the importance of greater efforts to enhance the efficiency of financial intermediation within the region. Indeed, capital market reform is high on the agenda of most Asian economies. There has also been considerable progress in the diversification of financial intermediation channels, specifically in the development of the bond market. At the end of last year, the amount of domestic bonds outstanding in eight economies1 that we have surveyed was equivalent to 47 percent of the combined GDP, more  1  Hong Kong, Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan and Thailand. BIS Review 30/2004  1  than double the 20 percent at the end of 1995. Over that eight-year period, the bond market’s share in total financing grew from 11 percent to 19 percent.