this is why we have to be cautious, encourage appropriate risk management and call for avoiding complacency. ft : this situation of excess capital, as you described it, what is the reason for this, and does loose monetary policy by central banks play a role? and should one pay more attention to global effects of national decisions? jct : as you might have seen, the call of central bank governors for no complacency goes in all directions, financial institutions, managers, in the private sector as well as in the public sector. as regards the central banks, i really trust that we are doing what we judge necessary, to be up to our responsibilities on both sides of the atlantic, and both sides of the channel, of course, and everywhere in the world. the major reasons for observing what we are observing today? i mentioned two of them. i mentioned the way the number of emerging countries are prudent and cautious. at the moment i'm speaking in terms of posting current account surpluses. i have mentioned the fact that we had the oil shock of the addition forced savings. i could certainly [ also ] mention the sophistication in the financial markets, which has permitted, obviously, to engage in a remarkable dissemination of risks through sophisticated derivatives which perhaps explains also why you have an appreciation of risk, which is different now from what it was before. i would say all this has to be taken into account. note that i don ’ t pretend to be exhaustive. ft : let me ask about hedge funds, seeing as we're in germany, where a political class seems to have an allergy to hedge funds. do you think they should be regulated? jct : i think that there is a large level of consensus now that a lot of progress, should continue to be made at the level of the prime brokers, in order for them to be as, i would say, aware as possible, of the risk that they are taking. and this, of course, is something, which can be checked by the banking surveillance authorities, so there is a way to improve the indirect approach, which would permit ensuring that through those financial entities that are regulated, we are dealing with appropriate behaviour of the hedge funds themselves. you have another area where, i trust a lot of progress was made, since the discussion took place, in particular of the g7 / g8, which is that we would be able to embark on what i would call

the right, which has accepted that a flexible economy is paying off in terms of growth and job creation. the fact is that previous reforms are giving the uk a competitive edge. but if you look at the figures, ireland is growing faster than the uk. ireland has a gdp per capita, which is higher. fancy, ireland in the euro area with a gdp per capita over and above the uk one? i mean are you so sure that the uk made the best choice! but again, it ’ s entirely up to the uk, to the uk government and to the uk people. ft : but it was a frenchman – it wasn't you – who once said, ten years ago, without the uk, the euro zone would be like someone without a right arm. jct : i don ’ t know which frenchman told you that. he would certainly express a view, which is unanimous : we all call for the uk to get in. and the uk knows that. so it ’ s a very simple situation. we all call for the uk to get in. it ’ s up to the uk. that said, even without the uk, we are 318 million people. so even without the uk we are of the order of magnitude of the us. and on top of that, out of the 27 eu member states, 25 have no opting - out clause. so 25 have already committed themselves to enter when time comes, meaning when the maastricht criteria are met. and on top of that, out of the two that have an opting out clause, one, denmark, is already de facto in the euro area, and considers that the belonging de facto to the euro area is serving its national interest very well, on a bipartisan basis. ft : could you just rehearse very briefly, for the british people, what the benefits would be of joining the euro, say, tomorrow or in a years ’ time? if we did join, what would be the benefits? jct : i would say the uk has been absolutely instrumental in joining in on the very bold endeavour of the single act and the single market in the mid eighties. it was really something that had been decided upon by all europeans at the time, of course, but i would say the uk had been very active, and rightly so. it was the start of the rebirth of the european drive. it was something, which has been absolutely fundamental in my understanding of the historical evolution of europe