  Finally our balance sheet has a key role to play in supporting financial stability by providing insurance to banks and other financial intermediaries against liquidity risk – the risk that solvent firms cannot meet their financial obligations as they fall due. Of course we expect firms to self-insure against liquidity risk as part of prudent financial management. But it would be unrealistic and inefficient to expect them to insure against all shocks and so as a backstop we provide firms with the ability to borrow reserves (as well as dollars and euros). Liquidity insurance is very much an “old normal” – it goes back to Walter Bagehot in 1873 and his famous dictum to lend freely, at a high rate of interest and on good banking securities. But it is worth noting that, whilst liquidity insurance is an “old normal”, our current suite of facilities is much expanded over the last fifteen years. The Bank learned lessons from the GFC, launching a revised Sterling Monetary Framework in 2013 under an approach Mark Carney, the Bank’s former Governor and another former student of Peter’s described as Open for Business10. This expanded toolkit is just as much a part of the “new normal”.11  Of course the financial system is constantly evolving.
13  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  13  Figure 7: Climate metrics for the APF corporate bond portfolio  Taken from “The Bank of England’s climate-related financial disclosure 2020”,  It is worth saying that the question of how best we might incorporate climate considerations is not a straightforward one. Simply labelling firms as “green” or “not green” at a point in time isn’t necessarily enough; what is needed is an approach that would incentivise companies to make the transition from one state to the other. As Andrew Bailey, the Bank’s Governor, has said, including at our most recent Monetary Policy Report press conference in February, work on this is already under way at the Bank. But any change in approach, to a new “future normal” for policy, could only be made if it was consistent with the remit given to us by the Government. The outlook for QE  I want to finish by saying a few words about how I see the outlook for monetary policy and QE as of today, eleven months on from our initial response to the Covid pandemic. My overall take on QE is still that it is a tried and tested tool; for me it is the marginal monetary policy tool at present. I said in a speech I gave in October that we had QE “headroom” remaining28. And although we have announced £ more QE since then, that still remains the case.