The Rt Hon Sir Edward George GBE: The progress of the euro  Speech by The Rt Hon Sir Edward George GBE, Governor of the Bank of England, at the Cercle de L’Union Interalliée in Paris on 24 October 2000. *  *  *  Thank you, Mr Chairman. I am grateful to the French Section of the Franco-British Council for giving me this opportunity to address this distinguished audience here in Paris, and I am delighted to share this public platform with my dear colleague, Jean-Claude Trichet. You have invited us to speak about the progress of the euro. I am very happy to do so from my British perspective - at least for the time being - as a keenly interested observer. My perspective you might expect would be very different from that of Jean-Claude, who was, and is, one of the principal architects of and a major driving force behind the process of European monetary union - one of the true founding fathers. In fact you will find that our analysis and assessment of the euro’s progress so far is very similar. I hope that will not come as too great a disappointment to you! We would certainly, I think, agree that the preparations for and introduction of the euro at the beginning of last year were a technical triumph. The euro-payments infrastructure is generally working well and has underpinned the integration of the euro money market which is an essential precondition for the effective implementation of Eurozone monetary policy.
In this regard, a stress testing system, introduced in 2007, already contributes to better assessing banks’ risk management and evaluating adequacy of capital assets to potential risks. In view of the large number of foreign banks presently operating in Algeria, continued efforts are being made to develop bilateral cooperation on their supervision. In conclusion, prudent management of resources and continued strengthening of the financial and banking system stability allow Algeria to consider its medium term economic objectives with a relative confidence. However, the deepening of the international financial crisis and its drastic spillover effects on the world economy is already affecting the country through a number of channels, notably: •  a reduction in its savings capacity. The sharp decline in oil prices is drastically reducing hydrocarbon export receipts and consequently government’s savings capacity. A prolonged weakness of oil prices would inevitably erode the financial wealth accumulated in the stabilization fund with a correlative reduction in international reserves;  •  a reduction in the yields on the investment of international reserves, as a consequence of low interest rates in international markets. 2  BIS Review 21/2009