this exercise - - to prepare the uk markets for wholesale activity in the euro by january 1999 - - has now gathered substantial momentum. let me touch on a few of the main priorities being pursued : 16. first, market participants agree on the need to be able to trade in london the full range of euro - denominated instruments. 17. secondly, they also agree on the need for appropriate payments mechanisms in london to carry out transactions in euro both between parties within the uk and cross - border to and from the uk. 18. thirdly, efficient, cost - effective mechanisms for settling transactions in euro - denominated securities also need to be made available in london. 19. fourthly, there is agreement on the desirability of harmonised market conventions for the issuing and trading of euro - denominated instruments. 20. fifthly, there is agreement on the need for as sound a legal basis as possible for euro transactions, to provide legal certainty and to ensure continuity of contract. 21. sixthly, there are tax and accounting issues to be addressed, related to the introduction of the euro. 22. there is work going on in each of these areas, and good progress on many of them. let me give you one example - - the payments system, which lies at the heart of the uk ’ s preparations for the euro. the uk ’ s sterling real - time gross settlement ( rtgs ) system is being developed to accommodate the euro, so that from the beginning of 1999 euro wholesale payments may be made in a safe, efficient and cost - effective way as sterling payments can now, even though the uk will not be a participant in the monetary union at the outset. that development remains on schedule, and it is encouraging that the uk system ( chaps ) has had expressions of interest recently from a number of overseas banks wishing to join. 23. the uk euro system - - chaps euro - - will allow payments to be made both between parties within the uk and cross - border from and to the uk through its link to target. using the knowledge and expertise we have acquired through developing and operating by far the largest rtgs system in europe - - with average daily volumes of some 70, 000 payments, worth some £150 bn - - we are contributing a great deal to the technical development of target. because it extends the benefits of rtgs systems, in reducing the risk in payments, for the first time cross - border, it is a project we wholehearted

without state aid. that is why i have no concerns about the french banking system. should banks ’ customers, companies and individuals, fear a credit crunch? no, and the figures bear it out. french banks ’ lending activities remain very robust : up 8 % for mortgage lending, up 5. 6 % for corporate lending and up 5. 1 % for lending to smes. it is precisely their retail banking business that makes them sound and profitable. bis central bankers ’ speeches is france condemned to undergo a period of prolonged austerity? france must be extremely rigorous in the management of its public finances. a balanced budget must rapidly be restored, which presupposes in particular a structural reduction in government spending. like many other countries, we have been living above our means for too many years. we need to stop accumulating debt. growth will return if confidence does. and to reinstate confidence, we must guarantee that our public finances will be consolidated. bis central bankers ’ speeches