What is Market Intelligence?
The Bank of England engages regularly with contacts from a range of institutions and market participants to learn about conditions and developments in financial markets. The ongoing process of discussion with contacts, followed by analysis of any information gained to identify insights relevant to policy is known as Market Intelligence (MI). Since 2004, there has been a formal MI programme, co-ordinated by a central team, in which staff from the Markets Directorate and the wider Bank participate.
Why does the Bank gather Market Intelligence?
The purpose of MI is to ensure that the Bank’s policy decisions are made and implemented with a detailed understanding of the financial market context in which the Bank operates. Discussions with external contacts provide additional insights beyond analysis of data alone (and are particularly useful where there are data constraints). They help paint a clearer picture around observable developments, enabling the Bank to better understand not only what is happening, but why.
MI feeds into internal analysis on policy relevant issues, and contributes to decision making, policy implementation and communications by the Bank’s three main committees: the Monetary Policy Committee, the Financial Policy Committee, and the Prudential Regulation Authority Board. This contribution can take place at any number of stages of policymaking, with MI able to:
Provide fresh qualitative perspectives to supplement quantitative analysis, so that policy decisions are made with regard to their context.
Support the design of, and aid in assessing the impact of, the Bank’s operations.
Provide insights on those markets, products and sectors where little or no public data are available.
Scan the horizon for signs of actual and incipient sources of monetary and financial instability.
On what markets does the Bank gather Market Intelligence?
The Bank engages in conversations with a wide range of market contacts, in regulated and unregulated markets, as well as periodically with market participants operating in major overseas financial centres. London’s position as an international financial centre both necessitates and facilitates this broad coverage. The Bank deploys necessarily limited resources to MI and therefore prioritises those markets, products, and sectors judged most likely to present risks to the monetary and financial stability of the United Kingdom. The Bank will therefore have varying levels of knowledge in various financial markets and does not, nor would not, aspire to know everything about all financial markets operating in the United Kingdom.
External contacts are aware of the value that MI can add to the Bank’s decision making and policy analysis, and the contribution that MI makes to maintaining the monetary and financial stability of the UK economy, which is explained in the MI Charter
. They are, therefore, forthcoming with sharing their first-hand financial markets experience and insights in order to support the Bank in achieving its mission.