. what all this means, in turn, is that the most monetary authorities can hope to achieve is to maintain overall macro - economic stability ; we cannot pretend that this means stable conditions for every sector of the economy, still less every individual producer. now let me be clear, i'm not pleading impotence! monetary policy can have very powerful effects on overall macro - economic stability. but it is important that the limitations of monetary policy - what it can and what it can't hope to achieve - are clearly understood. otherwise expectations are likely to be disappointed, and disappointed expectations may lead to building pressure for alternative policy actions, which may not in the event be in our longer - term economic interest. against that - rather long - winded - background i turn to the uncertainties in the present world economic situation. the major uncertainty, of course, relates to the situation in the united states - the world's largest economy - which had experienced a period of exceptionally strong economic growth with relatively low inflation until the latter part of last year, which itself played a vital part in buoying up the whole world economy through the asian financial crisis. briefly - and no doubt oversimply - this very strong performance was made possible by developments on the supply side of the us economy in the form of exceptional productivity gains, as the application of new information and communications technologies spread through the economy. this development - though extremely difficult to quantify promised a higher sustainable rate of growth in the us economy and higher corporate earnings growth. that expectation in turn contributed to a rapid rise in equity prices, especially in the " high tech " sectors, which helped stimulate both business investment in the us and consumer demand causing the private sector to move into financial deficit. it also attracted massive direct and portfolio investment inflows from abroad which over - financed an increasing current account deficit in the us and caused the dollar to strengthen against other currencies. but by the first half of last year the us economy was expanding at a rate of around 5 %, which even on the most optimistic view of underlying productivity growth was clearly unsustainable. the pace of demand growth in the us needed to slow down - as of course it has, dramatically, to the point where growth in the us in recent quarters has pretty well come to a halt. the big questions now are whether we are at the low point, and what might we expect in terms of the strength of a recovery. and the reality is that no - one

procedure can be used in combination with a partial property transfer or bridge bank. this administration procedure is broadly the same as a conventional administration save for the very important difference that the administrator has a statutory objective to support the transferred business with any infrastructure left in the insolvent rump. finally, under the srr provisions, it is possible to take a bank into temporary public ownership. for this approach, the treasury would be in the lead, and there is a higher test of systemic importance to be passed ( there must be a serious threat to financial stability ) for this approach to be used. as i have indicated, the srr contains important roles for all of the authorities. the fsa is responsible for triggering the srr by determining, broadly, that a bank no longer meets its threshold conditions for authorisation, and there is no reasonable prospect of it taking actions to correct the situation within an acceptable timeframe. the fsa is also responsible for approving the transfer of business to another institution that it authorises. the bank of england is responsible for operation of the srr ( with the exception of temporary public ownership, where the treasury is responsible ). the bank will consult the fsa and treasury before selecting the srr tool to be used, and we need to obtain the agreement of the treasury to the implications of the chosen tool for the use of public funds. also, the bank can make recommendations to the fsa when it feels that the srr should be triggered, though as i have said, the decision is for the fsa. finally the financial services compensation scheme ( fscs ) plays an important role in the resolution process. this would be very obvious if an actual payout of depositors was chosen and the fscs would work very closely with the administrator. they also have a prior role in assessing whether payout is feasible in a reasonable time. but the fscs can also be requested to contribute to the cost of other forms of resolution up to the net amount it would have failed to recover in insolvency if there was an actual payout. this approach can be used, for example, where there has been a transfer of deposits – and the fscs can provide a suitable deposit to contribute to the immediate cost to the authorities. the fscs does not however operate a pre - funded scheme in which money is available on call to provide such a substitute deposit. it may therefore have to borrow from the treasury in order to contribute to the