to effect a stay on triggering default clauses in contracts. for me, the big point here is to achieve resolution planning which creates sufficient confidence among national authorities that there is greater trust, and therefore a greater willingness to assume, for instance, that capital and liquid assets are moveable and can be employed across countries when needed. it is an essential pre - condition for confidence in cross - border bank activity and likewise it provides an important counterweight to policies that trap capital and liquid assets in host jurisdictions. in turn this allows a more neutral stance on the subsidiarisation versus branching issue. resolution is the toughest nut to crack in the financial reform package, but it is also the one that i think does more to unlock other issues, including the appropriate steady - state endpoint for the bank capital regime. put simply, the answer in my view is different in a world of effective resolution that ends too big to fail. but in the alternative outcome, where too big to fail remains with us and there are doubts around the effectiveness of resolution, it is hard to avoid the conclusion that higher capital requirements will follow, and cross - border establishment will be through subsidiaries. let me also say that we have made more progress on resolution in the last few years than many people expected. to say that we are not there yet should not conceal the real progress made. and, an important credit on this goes to paul tucker who has led much of the international policy thinking on resolution. paul leaves us at the end of the week for the calmer environment of harvard – we shall miss him in many ways, and i hope that when we get to an outcome on bank resolution that meets our wish to reject the permanence of fragmentation, we will remember how much paul did to get us there. the real progress that we have made on resolution issues makes it reasonable to start to take steps towards planning for a safe resumption of the growth of cross - border banking in ways that had been in some senses discouraged, and sometimes with a history of discouragement going back before the onset of the crisis. a good example of this is our approach towards branches from outside the european economic area ( remember that eea branches are governed by the single market legislation ). earlier this week, it was announced that the pra will be prepared to see chinese banks open branches here ( recognising that the bank of china already has a branch in london ). i want to describe how this change can come about, and

mr king looks at interest rates and the new monetary policy committee in the united kingdom lecture delivered by the deputy governor of the bank of england, mervyn king, at queen ’ s university in belfast on 17 may 1999. present at the creation two years ago, when it announced that the bank of england would be granted independence, the n ( n ) ew labour government surprised everyone, not least the bank of england. since then, decisions on interest rates have been taken not by the chancellor but by the monetary policy committee. much has followed from that single bold decision to take interest rates out of day - today politics. the transfer of the operational responsibility for setting interest rates to a new monetary policy committee was a major policy, indeed constitutional, innovation. the excitement of being involved in the construction of a new monetary institution for the united kingdom has both motivated and rewarded the extraordinary efforts of the bank staff who made the new process work, and i want publicly to thank them for that. in the words of dean acheson, to be “ present at the creation ” is an experience which few involved in policy are ever privileged to share. inevitably there have been changes to the bank. it has had to redirect its resources to focus on achieving and maintaining monetary stability in this country. responsibility for banking supervision has been transferred from the bank to the new financial services authority. the job of managing public sector debt has passed to a new debt management office. and the treasury, relieved of its responsibility for setting interest rates, can now focus on fiscal policy and measures to raise the long - run growth rate of the uk economy, as well as ensure that the fruits of that growth are distributed fairly. each body now has clearer responsibilities. of course, not all of our present monetary framework dates from 1997. it was following our exit from the erm in september 1992 that monetary policy was first directed to achieving an explicit inflation target, initially a range of 1 – 4 % and, subsequently 2½ % or less. with a floating exchange rate, any anchor for the price level had to be based on a domestic nominal target. the move from secrecy to transparency in the conduct of policy also dates back to 1992 when the then chancellor asked the bank to produce a regular independent inflation report in order “ to make the formation of policy more transparent and our decisions more accountable ”. the first inflation report appeared in february 1993. those changes led to a significant improvement in our macroeconomic performance. but many, especially elsewhere in europe,