the rt hon sir edward george : changes in the financial services industry speech by the rt hon sir edward george, governor of the bank of england, at the 16th european finance convention, london, 6 december 2002. * * * mr chairman, ladies and gentlemen. may i begin by congratulating you, claudio - and your colleagues - on organising such a remarkable 16th european finance convention here in london, spread over the past five days. i don't think i've ever seen such a distinguished and comprehensive list of speakers - ranging from politicians, central bankers and financial regulators and representatives of the international financial institutions, as well as representatives of private sectoral and specialist financial services trade associations and experts from commercial companies - all assembled on one program. i gather that the attendance has not been all that it might have been during the week. but perhaps that's not surprising : anyone with the stamina to attend even half of your proceedings is certainly a chronic insomniac. but those who have been here will have been rewarded by knowing everything there is to know about the recent development and current state of the financial services industry and how it might evolve. and they still have to listen to me! but don't despair - it's the last lap - and i'll try to keep it short! you have certainly had a great deal to discuss. the financial services industry - globally and not just regionally within europe or nationally - has been going through a prolonged and continuing period of unprecedented change. there are to my mind two main drivers of that change - first, the progressive shift - within the industrial world but increasingly also over the past decade or so in emerging markets and transition economies away from varying degrees of centralised economic administration towards an increasingly open, market - based approach ; - and, secondly, the revolution in information and communications technology. the potential economic advantages of free market competition nationally, and its logical counterpart in free trade and the free movement of capital internationally are now pretty well taken for granted just about everywhere. while no - one would pretend it's a perfect guide, profitability is the best guide we have to allocating limited real and financial resources to wherever they can be most productively used. so it is - potentially - the most effective means we have of generating the wealth, and employment and rising living standards we all want to see. and liberalisation or deregulation - including liberalisation in the financial sector - needs to be seen in this context. of course

and links in all of this, it would have to be said that the present moment is a rather disappointing one. a good case can be made that australia served a useful role during the crisis, first of all as participant in the support packages ( japan was the only other country to contribute to all three ), but more importantly in its assessment of the crisis as it unfolded, and its attempts to point out deficiencies in the multilateral approach, with the visit of our foreign minister and the rba governor to the united states in early 1998. however, it would have to be said that this voice was not heard, and very little was achieved. australia ’ s own performance during the asian crisis might be a positive example and a reminder of the benefits of competent policies, but may well have been mistaken, by our asian neighbours, as boastful blowing of our own trumpet during a time of their misfortune. the souring of our relationship with indonesia over timor has blocked off a potentially important entree into the asean arrangements. our best chance, now, is to build on the myriad spider - web ties which bind all sorts of australians - business people, academics and officials - to their counterparts in asia, in the hope that this network proves a strong enough foundation for us to take a vigorous role in whatever regional arrangements are formed in asia.