Despite contemporary opinion at the time suggesting that a delicate balance needed to be struck between the role of the state and the activity of the market, the willingness of the state to legislate on these matters was a significant step in that it acknowledged more explicitly than before a legitimate public interest in insurance 18. Despite this, many thought that the Act was not robustly implemented, nor did it deliver results overnight. Indeed, the 1870 Act was relatively non-interventionist compared to how insurance regulation would evolve throughout the 20th century. But before we come to developments in the nearer term, it is worth noting that it wasn’t just the private sector that was mobilising itself in the insurance industry at this time. In 1865, Parliament passed the Government Annuities Act, which empowered the PostmasterGeneral to conduct life assurance business on behalf of the state. A year earlier, Gladstone (then Chancellor) delivered a speech to the House of Commons in which he was particularly scathing of the high lapse rates and expense ratios which it was felt were giving  14  Clayton (1971). See also, Alborn (2009). 15  Rawlings (2015). 16  Alborn (2009). 17  Council of The Institute of Actuaries, Minute Book II: January 1854 – May 1866, see minutes of 9 March 1854 and 1 August 1857. 18  Rawlings (2015). 6  BIS central bankers’ speeches  policyholders a raw deal.
In the last few months the expected future correlation of the deutsche mark/dollar and lira/dollar rates has strengthened, suggesting a stronger market expectation of those currencies being part of the first wave. Very recently, a few doubts seem to have emerged about the project itself, though it would seem that, according to the market, the most likely outcome remains that a euro of some sort would start on time. I recognise that this is a difficult background against which businesses need to plan. Our own advice, which we have maintained for some time now, is that it is prudent to plan on the basis that the euro will begin on 1 January 1999, as set out in the Treaty. As far as the position of the UK is concerned, the option remains open, the policy remains what the French call ‘le wait and see’. But the new Chancellor, like the old, has acknowledged that there are considerable difficulties to overcome if the UK is to be a first wave member. This is not a tidy position to be in, perhaps, but against the uncertain background, it nonetheless has a certain practical appeal. But taking my prudent assumption - that EMU will go ahead - what can we say about the impact on the London market in general, and on the futures and options business in particular?