city ’ s professional institutions to work with the european commission and the ecb in developing the necessary legal and technical framework. the city ’ s contribution to the successful introduction of the euro is widely acknowledged on the continent. and the city has continued to play a very active part in developing market activity in the new currency ever since. in many respects the city is already an integral part of the eurozone. there were those who argued that the city would suffer if the uk failed to join from the outset. that clearly has not so far happened - quite the reverse. the argument now is that we will suffer if we don ’ t join reasonably soon. that ’ s not something you can actually prove either way. it ’ s not a general point about the city ’ s competitiveness. it ’ s euro - specific, with the implication that somehow or other obstacles will be put in our way. that possibility cannot be altogether excluded, but it would be illogical. most of the people that i talk with recognise the positive contribution the city is making to the development of euro financial markets - it is in fact the most positive contribution that we can make from the outside. of course it represents competition with other european financial centres, but at the macro - economic level such competition is a positive - not a zero - sum game from which borrowers and lenders and market intermediaries collectively all stand to gain. certainly the city has benefited from the euro ’ s introduction, but not at the expense of other centres, rather alongside them. against that background the bank is continuing to work constructively with the ecb though its membership of the general council, while at the same time we are working with the government and the financial sector to ensure that we are technically prepared for transition to the euro if and when that is what the government, parliament and the people of this country decide. the build - up to the euro roughly coincided with the accelerating advance of information and communications technology that is sweeping across the global economy. this development, too, can give rise to technical concerns - the bank and fsa cooperated, for example, in helping to ensure that the financial sector was properly prepared to combat the millennium bug. but its ramifications go very much wider. we are having to monitor very closely the potential impact of the “ new economy ” on productivity growth and what that may mean for monetary stability ; and we are having to keep a very close eye on financial market volatility as investors struggle to assess its impact

eddie george : financial stability and the city the evolving role of the bank of england speech by the rt hon eddie george, governor of the bank of england, at the london chamber of commerce conference, held in london, on 13 june 2000. * * * thank you, chairman. i ’ m pleased to take part in this conference, and to share the platform this morning with gavin, but also with howard davies my long - standing partner in crime - or perhaps i should say in crime prevention. you ask me to talk about the evolving role of the bank of england, in relation to financial stability in particular, which i ’ m happy to do. in fact it is rather easier to talk confidently about our role these days since it is now more clearly defined. a remarkable thing about the earlier legislation - the 1946 bank of england act - was that it made no mention of the bank ’ s essential “ raisons d ’ etre ” - what we were there to do. it seems to have been taken for granted that everyone knew what our role was. but about a decade ago we decided to define our core purposes more precisely for ourselves, primarily for internal management reasons. we identified three core purposes. the first two : – the maintenance of monetary stability ; and – the maintenance of the stability of the financial system are key objectives of central banks pretty well everywhere. our third core purpose - the promotion of the efficiency and effectiveness of the financial system in serving the interests of the wider economy - was more unusual for a central bank, but arose from a long - standing tradition of catalytic involvement in the development of our financial system, including, in its international dimension in particular, encouragement of the role of the city. these three core purposes have been essentially carried over into the new statutory framework introduced through the bank of england act of 1998. there are certainly some very important changes in the more precise nature of the bank ’ s role. in relation to monetary stability, the bank, through its new monetary policy committee, now has independent responsibility for the operation of monetary policy and for achieving consistently low inflation as defined by the chancellor. and in relation to financial stability, responsibility for banking supervision has passed from the bank to howard at the fsa - which helps to explain why i have retained more of my hair... than... i might otherwise have done! but, notwithstanding these important changes, our core purposes remain. the memorandum of understanding between the treasury, the bank and the fsa, in particular defines