Bank of England (BoE) Governor Andrew Bailey said on Tuesday that central banks are underestimating recent changes in financial markets, warning that their pace does not seem to be slowing down. He argued that central banks, which are responsible for ensuring financial stability, must understand these changes in order to successfully respond to them.
Bailey advocated for more dynamic market stress exercises and the introduction of a contingent liquidity facility for certain non-banks to reduce the risk of stress to core markets. He also said reacting to crises "may not always need to be more regulation," but rather tools such as liquidity facilities and improving areas of the financial infrastructure.
