few “ market - makers ” do so. third, therefore, the rules and infrastructure supporting the financial system need to help it withstand stress. accounting and valuation policies is one such area, now being debated. another is the trading and clearing platforms themselves. the authorities must do what they can to encourage the industry to focus on whether more wholesale market activity could and should be conducted across central trading and clearing platforms rather than otc. in the past, intermediaries have tended to be doubtful about this. but it is plausible that the system would have been somewhat more resilient if “ vanilla ” products had been subjected to the minimum standards, greater pre and post - trade transparency, and centrally set margin requirements that accompany transacting across central infrastructure. the underlying point here is that the bodies providing such central infrastructure have a clear interest in effective system - wide risk management and stability, and can be monitored by the authorities. for the authorities internationally, the moral of the story is that they must take an interest, from a systemic perspective, in the regimes which govern, and drive changes in, the structure and behaviour of the financial system. that means maintaining that interest during peacetime, not just a necessary rush of activity after crises occur. in setting the rules of the game, the authorities need to strike a trade off between risk and efficiency. we could reduce the risk in the system by stifling innovation. but in order to choose to tilt the balance towards innovation and efficiency, the authorities need to be confident that they have regimes that, amongst other things, ( i ) are effective in mopping up the mess, and ( ii ) do not create bad long - term incentives. orthodoxy is to cut off incipient systemic stress at the pass : intervene early, and decisively, but leaving losses with the private sector and afterwards rejigging the structure of the system to contain the implications for future behaviour. for that, tools are needed. in very broad terms, this is precisely what the special resolution regime for banks and improved deposit insurance proposed by the uk authorities are about. they are tools the authorities need to contain the disruption caused when bank failures occur and so to make such individual firm failures tolerable. but we also need policies for containing systemic stress more generally ; and, if possible, for heading off the risk of systemic problems in the first place. like others, in speeches i have identified three elements in that armoury : monetary policy ; central bank liquidity policy ; and policies

% target. but that hasn ’ t been achieved at the expense of consistently high interest rates, and weak growth and employment, as many people feared that it would be. in fact nominal interest rates have been as low they ’ ve been for 40 years ; the overall economy has grown without interruption quarter by quarter - at an average annual rate of 2¾ %, which is comfortably above its long - term trend ; the number of people in employment has risen fairly steadily - and is still close to its all - time high, while the rate of claimant count unemployment has fallen from 9. 6 % to 3. 1 % - the lowest its been for more than 25 years. and what ’ s true for the uk economy as a whole is broadly true for every region of the uk, including the north west region. total output in the north west increased year by year from 1992 to 1999 - the latest number i have - though at a somewhat slower annual average rate than in the uk as a whole, at around 1¾ %. the number of people in employment in the region rose by about ¼ million from the end of 1992 to over 3. 1 mn in the past two years. and the rate of claimant count unemployment fell from over 10 % to 3. 5 % - still somewhat above the rate for the uk as a whole, but again the lowest rate for over 25 years. but i ’ m well aware that you don ’ t have to look far beneath the surface to see that at the sectoral or individual business level things are a lot more uncomfortable than these aggregate figures might suggest. to a degree that ’ s always going to be true. competition - at both the national and international level inevitably means the expansion of some sectors or businesses at the expense of others. yet it is a necessary driver of the increasing economic efficiency and higher sustainable growth rate that we need to satisfy our aspirations for improving living standards. but the stresses we ’ ve seen within our economy in the past few years go well beyond normal competitive pressures. for the most part they originate abroad, with, first, the asia crisis and its aftermath in the late 1990 ’ s, happily substantially offset, as far as the uk was concerned, by strong growth in the united states, but then last year by the sharp, synchronised, slowdown into negative growth in most of the world ’ s major economies. although the pressures were not confined to manufacturing, and were not uniform within manufacturing, manufacturing was hit harder than