any discrimination against the “ outs ”. if intraday liquidity to the “ outs ” were to be restricted the effect would be to increase the cost of using target, and to damage the efficiency of the system for both “ ins ” and “ outs ”. that would simply divert euro payments to alternative mechanisms, including correspondent banking and the eba ’ s net end - of - day settlement system. it would be unlikely significantly to deter the international use of the euro - - if that were the objective - - any more than lack of direct access to national rtgs systems deters the international use of the dollar or yen or deutsche mark now. its main impact would be to make intra - european payments less secure. we would regret that. besides payments systems, the preparation of securities settlement systems for the introduction of the euro is a complex task in its own right. one of the reasons for this is that there are different approaches to securities settlement between different member states and financial institutions. another is that different approaches may be required to meet issuers ’ requirements for re - denomination. even in one market in one country, the introduction of major changes in securities settlement systems can lead to teething problems, both in the central it infrastructure and for individual institutions as they learn how to apply the changes. yet in the case of emu, a number of member states will switch to the euro more or less simultaneously at the start. that carries considerable risks of confusion and error, unless there is an extensive programme across europe to explain the changes required in detail first. this is not of course, a particular problem for the uk. ( ii ) market framework for the use of the euro - 5the second important aspect of preparation is the development of a comprehensive market framework for the use of the euro in london. the euro regulations help to provide the legal part of the framework as i understand you discussed yesterday. to make sure that the euro market in london, as elsewhere in europe, is as deep and liquid as possible, we also need to harmonise market conventions on new issues of securities in the euro money and bond markets, and conventions in the foreign exchange markets. market associations now agree on the basis on which conventions in these markets should be harmonised, and the bank has encouraged their initiative. the problem has been to see how eu - wide decisions will be taken. harmonised practices may develop spontaneously in the markets, but there is no guarantee of this. so it is very helpful that the emi council decided with

you. they include a vast, critical mass of markets and financial services in commercial and investment banking, securities and derivatives activity, investment and fund management, insurance and commodities and so on, involving an extraordinary concentration of the strongest financial businesses from all around the world. to give just one example, uniquely among the major countries we have more banks which are incorporated abroad operating in the city than domestic banks, and over half of the total deposits of the uk banking system is denominated in foreign currencies, worth over £1 trillion - - that ’ s a one and twelve noughts - - notwithstanding the current strength of sterling. the particular strengths that have contributed to this massive concentration of international business are many and various. they include : the english language ; the convenient time zone ; the ready availability of the relevant trading and other financial skills as well as professional support services - - in law, accountancy, tax, property, communications and so on. they include effective infrastructure. and they include importantly, too, an adaptive regulatory framework which has in fact been remarkably successful in maintaining confidence in financial institutions and markets without stifling innovation and risk - taking. all of these factors - - and no doubt others - - help to explain why some 600, 000 people are estimated to be employed in finance and other business services in greater london - - a number which i believe is roughly equal to the total population of frankfurt. now you will have noticed that none of these factors has anything to do with the question of the national currency used either here in the uk or in continental europe. the main impact of the advent of the euro on financial activity, as i see it, is that it will encourage the development of broader and deeper and more liquid markets, in financial instruments of all kinds, where they are currently fragmented because they are denominated in the various individual national european currencies. the city of london thrives on liquid markets regardless of the currency - - and it will thrive on the euro, whether the uk is “ in ” or “ out ”. measured in these terms the introduction of the euro represents an opportunity for london rather than a threat. i have no doubt whatever that there will be a vigorous euro - euro market in london, come what may, just as there is a vigorous market in euro - dm or euro - francs as well as euro - $ and euro - yen at present. the reality is that the location of financial activity does not depend upon the local currency. it