I think that pragmatism should prevail as to the form of the private sector involvement in crises resolution. But there is a need for general principles to highlight the roles and responsibilities of the public and private sectors, such as those that have been defined in the framework adopted by the G7 at the Köln Summit in June 1999. Among these principles, I would particularly stress: –  the focus on the medium term sustainability of a country’s financing position;  –  the objective to achieve comparability of treatment between and within a country’s bilateral official and private creditors. 1.5  Choice of the right exchange rate regime  The sustainability of any exchange rate regime depends crucially on its consistency with a country’s domestic macroeconomic and structural policy framework. This being said, the choice of an exchange rate regime should rest on the following principles: –  So-called “corner solutions” are not necessarily the only available options. Free floating rates may help to accommodate volatile capital flows and asymmetric shocks; however, they might not prevent misalignments leading to balance of payments desequilibrium, they might prove disruptive for the real sector of small open economies, which often lack the size for developing the necessary market infrastructure to cope with exchange rate instability. Currency boards can be warranted only under very specific circumstances.
I'm bound to say I welcome that distinction because the fact that the Government sets the target for monetary policy means that it is unambiguously committed to what we are tasked to do, and that, in turn, helps in some degree to distance the Bank from political debate. But there are two necessary consequences of this arrangement. The first is that you need independent, technical, experts to do the technical job entrusted to the MPC - not people appointed for their political convictions, nor representatives of particular economic or social interests. In that respect I think we have been extremely well served: the members of the Committee have been invariably well qualified for the technical jobs they've had to do; but more than that they have typically known enough, including about the inevitable uncertainties I have referred to, to know when they could be reasonably confident in their views and when they were guessing - as we all have to do at the margin. The Committee has been divided, generally very narrowly divided, in its forecasts and policy judgements more often than not since we started. That is both natural and healthy. But what is important is that the debate has typically been measured and reflective - and remarkably free of acrimony and dogma. And that to my mind is fundamental to the strength of the process. The second corollary is that the MPC process should be transparent and that its members should be individually and collectively publicly accountable for their decisions.