We thank them in advance for their assistance. I will start with a little background on Basel II but before doing so, let me first take the opportunity of thanking the Bankers’ Association and BIBA for their financial contribution to the lunch which you will be enjoying today and tomorrow.
One of the insights offered by what is known as the Mundell-Fleming model is that you cannot have it all – a fixed exchange rate, free movement of capital and an independent monetary policy – at the same time. This insight came to be known as the impossible trinity.