But clearly that is not true of the global economy as whole. Of course we have a great deal of experience in the EU of establishing common rules and policies. We know it is a painstaking process among 27 countries. But on finance and the economy we need to go wider than the EU and wider than the G7 to engage the new economies which account for so much of world growth. That is why it was so important and welcome that the recent meeting in Washington was of the G20 rather than the G7. Alongside the IMF it is going to play a key role in global macroeconomic coordination. 2. Better ground rules for cross-border financial crises  The failure of Lehman Brothers has confirmed that cross-border failures of large and complex firms are just as damaging and difficult to manage as we had feared. We need to ensure that proper contingency plans are prepared between the authorities most concerned for failures not just within the EU, where a lot of work is in hand, but on a global basis. As a start I hope we can establish a robust and predictable framework of rules and conventions that ensure that home authorities will co-ordinate a cross-border response better. The Financial Stability Forum is working on these urgently. This is not easy. In particular emergencies there are often different national interests at stake and the sheer pressure of events can limit cross-border consultation.
Moreover, our last system of explicit coordination – the system of fixed exchange rates under Bretton Woods – broke down for a reason. Monetary policy meant to suit everybody is likely in the end to suit nobody. Similar considerations underlie the widespread move in the emerging world away from fixed exchange rate regimes. Policymakers worldwide have learned that a framework capable of responding in a disciplined but flexible manner to changing domestic conditions works best over the long run. While explicit coordination looks neither feasible nor desirable, there is more that central banks in general, and the Fed in particular, could do to be better global stewards. One thing recent events demonstrate is the importance of effective Fed communication. It is clear in retrospect that our attempts last spring to provide guidance about the potential timing and pace of tapering confused market participants. In particular, markets seemed to conflate tapering with monetary policy tightening and raised their expected paths for policy rates. Lately, we seem to have done better: markets now seem to understand that policy rates will likely remain exceptionally low for a considerable period of time even after tapering is completed. As you know, we’ve taken a number of steps in recent years to increase transparency and improve our communications.