4. Impact on the Bank of England objectives  So what does this analysis means for the achievement by the Bank of its statutory objectives? Let me begin with monetary policy. 9  For further discussion of these points, see Carney, M (2015), “Fortune favours the bold”, Speech at Iveagh House, Dublin, 28 January. 10  See Draghi, M (2015), “Stability and prosperity in monetary union”, 2 January. 6  BIS central bankers’ speeches  4.1  Monetary policy  Put simply, economies with sustainable dynamism can grow more quickly before running into excessive price pressures. The UK’s greater openness as a result of EU membership provides potential for both greater growth and shocks. The MPC naturally takes these into account when setting monetary policy for the UK. While they have posed challenges at times, the influence of EU membership on these dynamics does not prevent the MPC from achieving its price stability objective. Under inflation targeting the MPC has ultimate control over the UK’s nominal destiny, allowing the flexibility of the exchange rate and free capital flows to facilitate adjustment to global shocks. The precise path of that adjustment is a policy choice we are free to make, within the framework provided by our monetary policy remit.
Ensuring the Bank of England has the instruments necessary to achieve its financial stability objective will depend on the EU continuing to have regulations of the highest standards, which strike the appropriate balance between harmonisation and flexibility, and which accommodate necessary national responsibilities, including for supervision. 5. Principles of a new settlement for financial stability  A successful and sustainable Economic and Monetary Union is important for the dynamism and stability of both the euro area and the UK. Since the crisis, many euro-area economies have undergone difficult reforms to improve competitiveness. Adjustment mechanisms to address the underlying problems of the euro area have been built, including measures to create a Banking Union and the development of the European Stability Mechanism, a permanent crisis resolution facility for euro area countries. Although much has been accomplished, further financial and fiscal integration within the euro area will be necessary to put EMU on a more sustainable basis. In particular, closer financial integration requires increased risk sharing in the public and private sector. That risk sharing can be achieved by the development of the more complete Banking Union in the euro area and, more broadly, a Capital Markets Union for the EU. How financial regulation in the EU evolves in future will be critical to the resilience of both the euro area and the UK economy. Closer union between euro-area member states is likely to necessitate further harmonisation of financial regulation across the euro area. By extension, those regulations can affect the rest of the EU.