the time he was living at home. adam smith, suspected of passing forged £20 notes, had a fixed address in edgbaston and was picking up benefits ”. so i hope the introduction of one adam smith will hinder the activities of the other. i am proud of the new £20 notes, but i cannot say the same of our £5 notes. there has been much, and in my view justified, criticism of their availability and condition. over the past ten years, the value of bank of england notes in circulation has doubled, from around £20 billion to around £40 billion. but none of that is accounted for by the £5 note for which the value in circulation has remained constant for fifteen years at some £1 billion. and the average lifetime of the note has doubled. as a result, many more notes are noticeably soiled and scruffy. atms account for over 60 % of all cash obtained by the public. few issue £5 notes. it is more economical for banks to stock atms with £10 and £20 notes. the problem is not at the production end – we have an ample supply of new £5 notes waiting to be used. we want to see them in circulation. there is a need for an adequate supply of low denomination notes that can be used for small transactions where cash is the predominant means of payment. such mutual convenience is a public good, and may not correspond to the private interest of commercial banks. that is why we must not let this situation continue any longer. the public need £5 notes. the solution may involve some alteration in the incentives for banks to obtain different denomination notes from the bank of england, new arrangements to increase the availability of notes to retailers, and an improvement in the durability of the notes that we print. so the bank will be initiating discussions to see what methods might ensure greater access by the public to new £5 notes. your reforms, chancellor, encompassed not just monetary policy – through the bank of england act – but also financial regulation – through the creation of the fsa and the 1997 memorandum of understanding between the bank, fsa and treasury. there was, however, some unfinished business in that memorandum. the bank of england was given responsibility for the oversight of payment systems. but it was given no formal powers to discharge that responsibility. instead it relies heavily on the influence afforded by its operational role at the centre of the high - value payment system. but that influence extends only so far. the time has come to

in asset prices - both stock markets and exchange rates - when expectations come back into line with the underlying increase in productivity. my final question was what does this mean for the economic see - saw in the uk? at present domestic demand is up and external demand is down. one way or another the imbalances in the world economy will be corrected. that is likely to go hand in hand with changes in exchange rates and other asset prices. whether this will happen gradually or through a sharp adjustment is impossible to know. but those changes will have a major influence on the speed at which the economic see - saw in the uk will move back to balance. the message for policy is that it is important not to let domestic demand grow too rapidly for too long. the longer the correction is left, the sharper the required adjustment will be. the higher one end of the see - saw, the greater the subsequent lurch will be. the trade deficit cannot continue to widen indefinitely. hence, at some point domestic demand will have to grow at below its sustainable trend level rather than significantly above as it has done now for some time - over 4 % a year on average over the past four years. by acting preemptively, and trying to anticipate developments, the mpc has been able to maintain overall stability in the economy, but the sharp rise in sterling led to a lurch in the economic see - saw. in one of the most influential contributions to monetary policy in the post - war period, milton friedman wrote that the characteristic of most central banks was that “ too late and too much has been the general practice ”. preemptive action to slow domestic demand growth to a more sustainable level is the key to avoiding a larger and more painful adjustment at a later date. that is why the mpc has raised interest rates by 100 basis points since september. i hope you now understand why our ambition is to be so boring. our aim is to maintain economic stability. a reputation for being boring is an advantage - credibility of the policy framework helps to dampen the movement of the see - saw. if love is never having to say sorry, then stability is never having to be exciting. miss prism should not have to tell future cecilies to omit the chapter on the activities of the monetary policy committee.