benefits from free trade and competition and act as a stimulus to growth and employment by allocating resources still more effectively based on comparative advantage, enabling savings to flow to where they can be most productively invested and production to be located where it can be most effectively carried on to satisfy consumer demand. the advent of the euro represents a massive new step in the same direction. the crucial and unique advantage of monetary union is the exchange rate certainty it will bring throughout the euro area - not just the reasonable de facto stability that can result from each eu member state individually pursuing disciplined macro - economic policies in parallel, and which has in practice been achieved within much of europe for quite long periods within the framework of the exchange rate mechanism - but actual, and in principle permanent, exchange rate certainty. there is no doubt that this is a very real advantage. one can argue that exchange rate certainty is not an essential complement to the european single market - any more than exchange rate fixity is essential to achieving the benefits of free trade more generally. but there is no doubt that intra - european exchange rate certainty will - through the intensified competition resulting from greater transparency of prices and lower transaction costs, through broader and deeper capital markets, and through the associated improvement in economic resource allocation - substantially enhance the macro - economic benefits to be derived from the single market. whether or not it is essential, therefore, exchange rate certainty is very desirable from this perspective. the potential drawback of monetary union can also be simply stated, though it is more difficult to assess. essentially there is a risk that the single monetary policy - the single, one - size - fits - all, short - term interest rate - within the euro area, which is a necessary corollary of the single currency, will not in the event prove to be appropriate to the domestic needs of each of the euro - member countries. there is no doubt that such risks exists. they may result from cyclical divergence. they may arise from differences in fiscal positions even though these are to be constrained through the stability pact. or they may result from economic shocks of some sort that have a bigger impact on some countries than on others. the rise in oil prices in the early 1970 ’ s or german reunification are classic examples. so the risk of divergent monetary policy needs within the euro area is real. and the damage it could cause if serious tensions between member countries were to emerge is substantial, because alternative adjustment mechanisms, such as labour migration or fiscal redistribution, that exist within

provide to each other, because if split up they may have to agree so - called transitional service agreements. second, on which essential services have been outsourced. third, on details of netting and derivative contracts, so that the bank can apply various statutory safeguards for creditors. that is a formidable task, and it is striking that, in the us, the fdic has introduced a requirement that troubled banks must be able to demonstrate that, if necessary, they could report each day the details of so - called qualifying financial contracts, which are essentially derivatives. we may need to contemplate something along those lines in the uk. all of that is needed after buyers for the business have been found. potential bidders for all or part of an ailing bank will themselves need the kinds of information typically offered to bidders in a “ friendly ” m & a transaction. so there is a case for banks routinely maintaining such a data room as part of their crisis contingency plans. in delivering its resolution responsibilities under the 2009 banking act, the bank is ready to work with banks and the fsa in helping to specify in more detail what is needed in practice. if the information can be ready almost routinely the execution of resolutions would be aided. in summary, as a consequence of its new statutory role, the bank can have a need for a lot of information about banks getting into distress. that might usefully be seen alongside the information needed before a bank reaches the point of being unviable, when it might apply to draw on the bank ’ s public liquidity insurance facilities, notably the discount window. and beyond that, a bank might seek emergency liquidity assistance, where the bank acts under the tripartite mou. 5 in either circumstance, the bank will need information on the bank ’ s liquidity position and planning, and a lot of detailed information on the collateral it would be offering. i therefore urge the bba ’ s members to send the bank ( as well as, of course, the fsa ) your contingency funding plans ; and, secondly, to pre - position collateral with us for the dwf. overall, we need to engage together constructively on what information the authorities need in order to handle incipient or actual distress. paragraph 14 of the memorandum of understanding between hm treasury, the bank of england and the financial services authority says : " in exceptional circumstances, there may be a need for an operation which goes beyond the bank's