between the ‘ in ’ and the ‘ out ’ scenario will be that notes and coins would not be introduced in this country if we are an ‘ out ’, so that for most of us life would go on very much as normal. mr. chairman, i have dwelt on the practical side of monetary union very briefly this evening, because i fear that the practicalities may be overlooked in the passion of the debate about the principle. but in my youth - which seems a very long time ago now - i was a boy scout, brought up with the motto “ be prepared ”. it is vital in this context that we are indeed prepared, whatever the outcome, and the bank is determined to do all that we can to ensure that we are. and provided we have properly prepared ourselves i do not believe that monetary union need hold great terrors for this country whichever way the decision goes when the time comes. if it is decided that emu is a safe club for the uk to join then i think this country is as well placed as any to live with its disciplines. if on the other hand, we remain on the outside but continue to behave responsibly - in our national interest, but also as a member of the eu - then i think the fears for inward investment, or for the future of the financial services industry in this country, will prove to be exaggerated. the economic reality is that businesses - whether financial or non - financial - will expand their activities in this country so long as it is profitable for them to do so. they would be answerable to their shareholders if they behaved in any other way. the key to economic prosperity in this country, mr. chairman, lies in continued macro - economic discipline in a context of structural, supply - side, flexibility, and that is true regardless of monetary union. provided - in or out - we persist in that, then we can continue to deliver a business climate of steady growth with low inflation for as far ahead as we can see. that is the best possible prospect for the bankers here this evening - and the best possible prospect for their customers.

is not a sufficient reason for dismantling one of our most successful sectors. moreover nationalisation has been tried in many countries and its record is poor. it may reduce the risk of shocks but generally only at a heavy cost in misallocation of resources ( and usually a continuing drain on the public purse ). in my view it should only be a very last resort. the aim of the game should be to manage the system so that society can enjoy the gains of a flourishing financial sector – the efficient allocation of resources and transfer of risk – whilst minimising the threats to economic stability. so we need to have effective systems not just for preventing crises but for dealing with bank failures if and when they happen. the collapse of securitisation markets in august 2007 and the failure of northern rock revealed gaps in the uk ’ s arrangements, with the benefit of hindsight, the main problem was not the handling of the initial rescue – although the tripartite ’ s footwork may have owed more to john sergeant than fred astaire. but i don ’ t think anyone believes now that the business could have been saved. it was in terminal difficulties and it was right to rescue it and protect depositors. the bigger problem was that, having stepped in, the authorities were hamstrung by the inadequacy of the legal powers to resolve it quickly and cleanly. we have learned from that autumn ’ s experience. since then we have found imaginative ways to provide the market with the liquidity it needs ( through the special liquidity scheme, long term repos, and now the discount window ), we led the world in recapitalising banks in the autumn and we have resolved the banks which could not survive swiftly and effectively both through private sector solutions and through the use of statutory measures. i am delighted that tomorrow the first parts of the new banking act come into effect and give the bank of england new powers to resolve failing banks and protect depositors. at the heart of the act is the creation of a special resolution regime for uk banks and building societies. the fsa will have the power to trigger this regime before an institution becomes insolvent. and once a bank is in the regime, the bank will have the powers to arrange for it to be wound up, drawing on a new bank - specific insolvency - procedure, or to transfer the whole or part of the bank to a commercial purchaser, if necessary via a temporary bridge bank owned