europe. as a central banker, i have nothing to say about the politics of monetary union - that ’ s for elected politicians. but it is also an economic issue and that is my concern. so what are the economic pros and cons? the potential economic advantages and disadvantages are now reasonably well defined - though different opinions inevitably attach different weights to the respective arguments. on the plus side, the crucial and unique economic advantage of monetary union is nominal exchange rate certainty within the eurozone - which takes over half uk exports. i ’ m not talking just about reasonable exchange rate stability - which might result over time from each country pursuing disciplined macroeconomic policies in parallel. i ’ m talking about nominal exchange rate certainty for the indefinite future. that very real economic advantage is well understood in the uk - especially by businesses that trade with, or compete with, businesses in the eurozone. and on that ground alone many of them, who have suffered from excessive sterling strength against the euro, would see our joining as an advantage provided of course the exchange rate were initially fixed at an appropriate - and significantly lower level than at present. at the broader macroeconomic level the potential benefit of joining - as a result of greater transparency of costs and prices and lower transaction costs - leading to greater competition and more efficient economic resource allocation is well understood. exchange rate certainty within europe - even though it is nominal certainty rather than real exchange rate certainty - would potentially enhance the benefits to be derived from the european single market. the euro ’ s second very powerful advantage is the possibility it opens up for much broader and more liquid financial markets. it will mean a progressive narrowing of spreads between borrowers and lenders - and that will be good news too for financial intermediaries as a group, because it will lead to higher volumes of financial activity - though not every individual intermediary will benefit, of course, in the more competitive environment. the city of london is already making an important contribution to this process of financial euro - market integration. so there are potentially powerful advantages. what then are the risks - the possible arguments against our joining the euro? essentially the potential downside can be summed up as the risk that the single - one - size - fits - all – short - term interest rate within the eurozone - which is the inevitable consequence of a single currency - will not in the event prove to be appropriate to the domestic monetary policy needs of all the participating countries. countries may have divergent cyclical positions.

operate on. in the fsb, we are putting in place a process where the most senior officials will talk to each other to reassure themselves on the resolvability of globally significant firms. from that will follow detailed operational planning, and requirements to remove impediments to executing resolution strategies. and flipping from my global hat to my domestic hat, at the bank of england we have been working closely with the fdic on how we would operationalise resolution strategies in a cross - border setting. you shouldn ’ t doubt that this will happen. don ’ t listen to siren voices who question our capability or will. financial protectionism and the fsb agenda which brings me, in conclusion, to a broader point. the international authorities are committed to maintaining global finance – global capital markets, the free flow of capital across borders. we are not trying to create a new order that incorporates financial protectionism. on the contrary : the balkanisation of finance would cut against the extraordinary historical changes towards a much more globalised real economy. but allowing a fragile financial system to persist would also be a threat to globalisation. in fact, it has to be recognised that around the world domestic authorities have been putting in place defensive measures, mostly below the radar of commentators, over the past few years. this comes back to the use of public money. a world in which public money is used to bail out banks or dealers, is a world in which balkanisation is likely because the authorities that deploy public money are accountable to domestic tax payers – people with votes in their jurisdiction – and to nobody else. but by delivering the fsb ’ s global agenda – not only on resolution, but more widely – we will significantly reduce, if not remove, the need for some of those balkanising tendencies. by making finance safe and orderly failure possible, i think we can take off the stage the most basic force towards balkanisation. the stakes are high. bis central bankers ’ speeches