I don't want to throw out any potentially relevant information on arbitrary grounds. Consistent with this approach, when asked about the role monetary aggregates play in my policy thinking at a recent Treasury Select Committee hearing, I sought to steer a course between recognising that monetary developments can – and often do – offer important insights into the outlook for the economy and monetary policy, but at the same time noting that money is not a 'summary statistic' that alone can or should determine monetary policy decisions. Monetary developments need to be incorporated into a wider assessment of the economic outlook, such as the MPC forecast that we publish regularly in the Monetary Policy Report. The importance attached to money in that context will vary over time and depend on interactions with other variables. For example, last year the likelihood of stronger consumption spending by households as we recovered from the pandemic  5/8  BIS - Central bankers' speeches  could be assessed by evaluating the 'monetary overhang' – the stock of household bank deposits held in excess of what might have been expected on the basis of historical norms – that was accumulated during lockdown. The same thinking applies to any macroeconomic or market information. In principle, it should be considered relevant to the extent that it informs well-designed monetary policy actions.
Would it be acceptable to use tax-payers money to refund foreign depositors at a larger scale? This might pose problems both for the home and host country. The wide divergence of national systems clearly needs attention. Potential solutions might include increased co-operation and harmonisation regarding fees and entry and exit rules. Crisis management. National central banks have national mandates in extending emergency liquidity assistance. In a future integrated European financial market, the mandate of the lender of last resort will not be as clear-cut. How should this function be organised when the largest banks might be systemically important in several EU member countries? There will also be banks that are very important in one country while being completely insignificant in a European context. Another issue is whose interest a national supervisor will protect in a crisis involving a cross-border banking group strictly its own national interest (the case now) or the interest of all member countries where the group might have operations? Conclusions These issues, or challenges, are essentially political. They are about how to share the risks and costs of financial integration. And as long as these challenges are left unaddressed they constitute political barriers to integration. We all say we want financial integration but as usual, nothing comes for free. Financial integration brings some difficult issues for authorities and politicians. Public authorities will have to rethink their roles and priorities.