Our last speech for this event will be held by Mr. Cristian Popa, Deputy Governor of the National Bank of Romania, showing you just where we, as central bank and as economy, stand in the preparation of the introduction of inflation targeting. What I do want to mention is the current debate on the appropriateness of adopting inflation targeting in Romania. I am very happy that monetary policy steals the spotlight from football, at least temporarily. Some acknowledged Romanian economists claim that inflation targeting is not needed since future euro adoption requires fulfilling the grueling conditions of the ERM-II framework. In line with this argument, the exchange rate might prove to be a better choice for a nominal anchor. Given the soon to be completed capital account liberalization, I believe that exchange rate management would be very difficult outside a currency board. Although I am confident about our option, I respect all disagreeing opinions. For those retaining their doubts about the benefits of inflation targeting, there is one more argument, courtesy not of a renowned economist, but of the Danish physicist Niels Bohr. When asked why he, an enlightened scientist, kept a horse-shoe on display in his house, his prompt answer was that “it helps non-believers too”. Likewise, provided that the National Bank of Romania has convinced enough people of its commitments, non-believers should also enjoy the benefits of this policy change. Ladies and gentlemen, let me now introduce Rachel Lomax, Deputy Governor of Bank of England and member of the Monetary Policy Committee.
12  Some US equity markets recently reached record highs, both the FTSE 250 and the S&P 500 have gained over 40% from their March lows, and sterling 3m and USD 3m LIBOR rates have come in 70bps and 81bps respectively from their crisis highs 10  All speeches are available online at www.bankofengland.co.uk/news/speeches  10  I would at this stage identify a number of areas that will likely merit further consideration in a comprehensive, evidence based, analysis of how stress evolved over the initial phase of the COVID crisis and whether and how market dysfunction could have been prevented without huge central bank intervention. Market liquidity broke down very quickly in dealer intermediated corporate bond markets and EME asset markets. This, bluntly, was no great surprise. The potential illiquidity of these markets under stress has been well known to regulatory authorities and market participants for some time.13  These markets are now very large. The global stock of non-financial corporate bonds at the end of 2019 reached an all-time high of $ trillion, with the stock of emerging market corporate debt around $ We need to examine the extent to which their illiquidity contributed to pressure on asset prices and liquidity elsewhere, given the desire of many of the holders of these assets to shift their portfolios to more defensive positions and to increase cash holdings.