More generally, though, I believe that we need to examine ways that could ease the tension between efficiency and safety. For example, if we are to encourage the entry of new financial institutions as a means of promoting greater competition, perhaps we should also consider a more formal, explicit policy of ‘early exit’ when an institution runs into trouble.
In designing the monetary policy strategy of the Eurosystem, the Governing Council also had to respect a number of practical issues and difficulties which arose because of the uncertainties created by the so-called shift of regime associated with the transition to Monetary Union. Where there were previously 11 open, generally small economies, there is now one large, relatively closed single currency area.