in london is in place so that anyone who wishes to do so can trade and settle in euro in london from the first day of emu. we are also helping to ensure that city firms whatever their nationality - are properly prepared so that they and their customers can make full use of the infrastructure. we are providing information to the london market so that firms - whatever their nationality - are as well informed as possible about the technical side of the preparations for the euro. this is the significance of our broadly quarterly series of publications on ‘ practical issues ’, which now has a circulation of around 40, 000, of which 5, 000 go directly overseas. we also aim to promote agreement between central banks and market practitioners across europe on practical issues in areas where the market requires a degree of co - ordination. in conclusion, i want to emphasise three points. first, the introduction of the euro on 1 january 1999 will create a major currency for financing, with significant depth and liquidity. second, london will be ready for the introduction of the euro. anybody who wishes to do so will be able to trade and settle in euro in london from the first day of emu. third, as europe ’ s leading financial centre, we are confident that london will be the international financial centre for the euro. and by providing competitive financial services in euro, london will help to increase the flow of business between europe and the us. the city is not just a major national asset. it is a major asset for europe and the international economy as a whole.

valuable policy tool. that is why basel ii is so important. but systemic crises do not always emanate from capital inadequacy. the first indication of trouble ahead may well come from a completely different area. what i am talking about is the question of liquidity. and my observation here is that we would be advised to give more thought to the underlying issues, risks, and mitigants which could be ingredients in liquidity problems. what are the drivers? what may cause liquidity to be withdrawn? to what extent could uncertainties, referred to a few moments ago, impact liquidity in unpredictable ways? what machinery / measures can best be devised to ensure that liquidity will continue to be available in times of stress? and, in the face of attempts to improve the resilience and efficiency of market infrastructure ( for example, clearing and settlement ), how will changing practices and perceptions affect the drivers of liquidity? this is, i feel, an area where standards and principles could be further developed which engender both the best practice understandings of the private participants on the one hand, and the interface with public policy imperatives on the other. conclusion basel ii has been steered to this point of take - off for the hugely critical area of capital adequacy. i would identify four challenges for the next stage. first, to achieve the successful implementation of basel ii by banks and regulators across the globe. second, to ensure that mechanisms exist to update it in the light of evolving best practice. third, to give thought to whether analogous agreements would be appropriate in securities and insurance. and, fourth, to ensure that the scale of work on capital adequacy issues does not cause us to overlook the importance, either of liquidity management, or the development of a more robust market infrastructure in the maintenance of financial stability.