institutions themselves – the imf and the world bank – have the legitimacy to represent all of their 187 member countries. but their governance is outdated. at the height of the crisis, the g20 and the g7 provided strong leadership. but legitimacy and leadership should go together. one without the other does not offer a sustainable vehicle for international cooperation. so allowing the g20 to metamorphose into the governing body of the imf makes a good deal of sense. such an evolution would, with a little commitment and imagination, create a single effective framework for international economic cooperation. and in the long run a more powerful and legitimate international body might be able to use its clout to deal with the imperfections and frictions that i have discussed. it might even be the vehicle for a more rules - based framework for the imfs, based on a judgement about the sustainability of the pattern of world demand. although that seems a distant prospect today, there is a precedent for a system of internalising cross - border externalities : the wto already plays a similar role in international trade. so far, these rules have stood the test of time. indeed, it is now more likely that protectionism would result from high unemployment, which the rules were not designed to prevent, than the pressures from producers which have been resisted. there is much to do. none of the underlying causes of the current crisis have been removed. the problem of “ too important to fail ” banks is still with us. and even more intractable is the challenge of how to reconcile free trade with a stable international monetary and financial system. today, the most obvious problem at the global level is that the imbalances are growing again. and continuing high debt levels, although in many ways a natural response to low long - term interest rates, leave indebted countries particularly vulnerable to a rapid reversal of high saving rates in surplus countries and a rise in long - term interest rates – surely inevitable in the long run – which would drive down asset prices. it is clear that these vulnerabilities affect us all. so recognising our common interest in moving to a more sustainable pattern of world demand is in our self - interest. the global community showed that it could work together when the world economy was close to the abyss in 2008. the challenge now is to prove that we can also work together when we are no longer in an immediate crisis, but still facing deep - seated problems. will we create a more

mervyn king : monetary policy developments speech by mr mervyn king, governor of the bank of england, at the cbi northern ireland mid - winter dinner, belfast, 22 january 2013. * * * i am delighted to be in belfast to deliver my final regional speech as governor. after the bank obtained independence in 1997, we decided to establish a physical presence in northern ireland for the first time. and i was able to announce the opening of the agency when i visited belfast in may 1999. since then the links between the business community and the agency have gone from strength to strength. none of this would have been possible without the commitment of a remarkable group of bank of england agents : first, nigel falls, then phil eckersley and now frances hill, all supported by gillian anderson, today the deputy agent. during that same visit, i met with a group of politicians from right across the political spectrum. they were surprisingly eager to talk with, not at, each other – because they wanted to exchange views about the economic future of northern ireland, and to get away, at least for a while, from the divisive nature of daily politics. you would have been hard put to identify the affiliation of those politicians from their views on how to promote economic prosperity in northern ireland. and this is the key to the future. in my regular visits, i have criss - crossed the province and come to realise how important is the business community as the agent of change and reconciliation. it is a challenge to which you continue to rise with spirit and determination. and it is why i enjoy coming here to meet with you, to learn about your progress, and to appreciate the extraordinary beauty of the province. i am conscious that there are significant differences between the economies of northern ireland and the rest of the united kingdom. tonight, however, i want to focus mainly on the economic outlook for the united kingdom as a whole. what are the bank of england ’ s diagnosis, prescription and prognosis for the uk economy? at one level, the diagnosis is self - evident. growth has been much weaker than most commentators expected. in fact, according to the official figures, there has been barely any growth at all over the past 2½ years. unemployment, at a rate of almost 8 %, is markedly higher than the level of around 5½ % before the crisis. and inflation, despite its fall over the past fifteen months from over 5 % to around 2½ %, remains above our 2 %