Whatever happens in relation to monetary union it is vital, it seems to me, that we hold on to this fundamentally important consensus. Moving on from there to the narrower question of monetary union, the potential economic benefits and risks have now become much clearer, and are rather well illustrated by our own present monetary policy dilemma. On the one hand, any manufacturer will tell you after his experience since last summer - about the great advantage of intra-European exchange rate certainty. On the other hand, with the single currency comes the single monetary policy the single, one-size-fits-all interest rate throughout the euro-area. The risk very simply is that the single interest rate may not in the event suit the domestic monetary policy needs of all the euromember countries - just as the present level of German interest rates of around 3%, reflecting the disappointing weakness of the German economy, would not at this point suit the UK - where, as I have said, we need to moderate the pace of our economic expansion. The potential economic risks, as well as the potential benefits, were recognised when the Maastricht Treaty was signed - and the famous “convergence criteria” were put into the Treaty precisely in order to limit the risks.
Our working assumption is that banks and others active in the wholesale financial markets will in fact choose to transact most of their wholesale business in the euro-denomination more or less from the start. And we assume that they will wish to offer euro-denominated facilities to major business customers that wished to use them. So, for example, non-financial companies, including large retailing companies, with an active business in other euro-area countries may wish to be able to quote prices or undertake transactions in euros from an early stage, although they would certainly still need to transact most of their local business in national currencies for some considerable period. On the other hand, we would not expect there to be much demand for banking facilities denominated in euros either for individuals or for the vast majority of smaller local businesses much before euro banknotes and coins become available in late 2001 or early 2002. At that point, the conversion of retail facilities into euros might proceed quite rapidly during the subsequent six-month period when national currency notes and coin are to be withdrawn - but again the principle of no compulsion and no prohibition would apply. Retail conversion is of course a massive undertaking. But the timetable does at least provide some 4-5 years from now for people to prepare.