Mr. George looks at the prospects for the City of London - in or out of EMU Speech by the Governor of the Bank of England, Mr. E.A.J.George, at the Royal Institute of International Affairs Conference in London, on 24/10/97. Prospects for the City -- in or out of EMU Mr. Chairman, you have asked me to speak specifically about “the prospects for the City - or out of EMU”. You -- very kindly in recent circumstances -- did not ask me to discuss the wider pros and cons, either of the project as a whole, or of UK membership. But perhaps I might nevertheless begin by making a more general point. Perfectly reasonable people can legitimately disagree about EMU, both in principle and about the appropriate timing and pace of monetary integration. On the project as a whole, most analysts would acknowledge that there are real potential benefits, but that there are also real risks to be set against them; and most would acknowledge that those risks will increase if the politics of EMU are allowed to run ahead of the economics, so that countries are allowed, or even encouraged, to participate, without first having achieved genuine, and sustainable, economic convergence -- in substance and not just some technical accounting form. On the question of British membership the new Labour Government has spoken of ‘formidable obstacles’ to this country joining EMU in the first wave.
In addition to making our own internal preparations at the Bank, we play a co-ordinating role in the financial community in three main ways: First, our job is to ensure that the necessary infrastructure is developed in the UK to allow anyone who wishes to do so to use the euro in wholesale payments and across the financial markets in London from the first day of EMU. Second, we aim to promote discussion between the EMI, national central banks and market participants across Europe about practical issues on which the market is seeking a degree of co-ordination. And third, we provide information: for example, through our quarterly series of editions on Practical Issues Arising from the Introduction of the Euro, which is distributed to around 32,000 BIS Review 106/1997  -4recipients across the City and beyond, including 4,000 directly abroad. And following the successful symposium we held early this year, we are planning to hold a further symposium, next January at the Bank, on London as the international financial centre for the euro. Our theme will be: ‘London will be ready’. I shall now turn to the steps that we are taking to ensure that London will be ready for the euro, whether the UK is “in” or “out”. (i) Payments and settlement infrastructure for the euro First of all, the payments and settlement infrastructure. We are constructing payments arrangements in euro in London which we intend to be at least as efficient and cheap as anywhere else in Europe, even if the UK stays “out”.