development in the exchange markets has been the disappointing weakening of the euro since its historic introduction at the beginning of last year. initially this appeared to be related to the impact of the global slowdown on some of the larger eurozone economies, which seemed likely to cause them to run further below capacity than had earlier been expected. but the more recent signs are that the eurozone economy is now picking up relatively strongly, and it is harder to understand the euro ’ s continuing weakness in the present context : it may just be a matter of time - for there is no doubt that the euro has considerable scope for appreciation. taken together, mr president, these various international developments since i was last here in belfast have greatly complicated the task of monetary management here in the uk - in fact it has been just about the most difficult external environment that i can recall. at that time monetary policy was still aimed at moderating the pace of domestic demand growth to prevent the re - emergence of inflationary pressure - including wage pressures in the labour market. we actually raised rates by ¼ % to 7½ % shortly after my visit - but i promise you that was not a direct result of my visit here. but we reversed engines fairly aggressively when evidence of the effect of global slowdown on our own economy began to appear in the autumn - cutting interest rates from 7½ % to 5 % between october 1998 and last summer. you might have supposed that this would have weakened the exchange rate, shielding us in some degree from weakening external demand growth - but not a bit of it - the exchange rate actually strengthened! but the easing of monetary policy may have helped to reverse the sharp fall in domestic confidence evident throughout the uk economy in the second half of 1998, and to avert the widely predicted slide into recession. in any event, after coming to a virtual stand - still in the fourth quarter of 1998, the economy as a whole bounced back last year, driven largely by domestic demand growth. and, for the economy as a whole, we can now, since 1992, point to the longest period of sustained low inflation - averaging 2. 7 % on the government ’ s target measure, with relatively steady annual growth averaging 2. 8 % - well above most estimates of our long - term trend rate, together with a sustained rise in the number of people in employment - to an all - time high and an almost continuous month - by - month fall in the rate of unemployment to the lowest rate for about 20 years. but if the

##scores just how lasting strong and norman ’ s vision for central bank co - operation was. but with greater access also comes greater risk – and in recent years central banks, in common with commercial banks, have had to come to terms with the sharply - increased threat from money laundering, terrorist financing and cyber - attack. once again there is an echo with 1917 : at a time of war, the bank of england and new york fed were obsessed with the possibility that their communications might be intercepted, and spent months debating the relative merits of the charmingly - named ‘ lieber five letter code ’ and ‘ bentley ’ s complete phrase code ’. but the potential sophistication of today ’ s attackers, and the financial, reputational and legal risks they pose to central banks are far greater than a century ago. the bank of england archives hold a number of letters between cunliffe, cokayne and strong on this subject. all speeches are available online at www. bankofengland. co. uk / speeches as simon potter has already said, that is why it is so important that, just as central banks co - operate to provide the services they need to another, they must also co - operate in raising the standards and controls applied to those services to the highest possible levels – because we are only as strong as our weakest link. raising standards means : within our own organisations – having robust risk - based processes for assessing counterparties and transactions, in compliance with relevant law and guidance ; for controlling the access, people and system risks in central banking processes ; and for monitoring and responding to potential risks if and when they crystallise. and, externally, it means sharing intelligence and promoting best practice ; and complying and attesting promptly, and with candour, to relevant international standards. making progress in both of these areas is vital if the expansion in access to central banks services of recent years is to be maintained. i want to end on a positive note. the international system is constantly evolving. policy regimes come and go. and the importance of specific reserve currencies may rise and fall : the minnows of today can be the giants of tomorrow. that is why it is so important to co - operate, as strong and norman clearly recognised at a previous critical switching - point in world affairs. of course, the concept of co - operation can be pushed too far. during his time in london in 1916, strong reported an ‘ astonishing suggestion ’