It continually has to earn it. For this reason, in the run-up to the introduction of the euro, the Bank of England is playing a key role in preparing London’s global marketplace for this major new opportunity, alongside market practitioners themselves: We are ensuring that the necessary financial infrastructure in London is in place so that anyone who wishes to do so can trade and settle in euro in London from the first day of EMU. We are also helping to ensure that City firms whatever their nationality - are properly prepared so that they and their customers can make full use of the infrastructure. We are providing information to the London market so that firms - whatever their nationality - are as well informed as possible about the technical side of the preparations for the euro. This is the significance of our broadly quarterly series of publications on ‘Practical Issues’, which now has a circulation of around 40,000, of which 5,000 go directly overseas. We also aim to promote agreement between central banks and market practitioners across Europe on practical issues in areas where the market requires a degree of co-ordination. In conclusion, I want to emphasise three points. First, the introduction of the euro on 1 January 1999 will create a major currency for financing, with significant depth and liquidity. Second, London will be ready for the introduction of the euro. Anybody who wishes to do so will be able to trade and settle in euro in London from the first day of EMU.
The tests include cyclical convergence and structural flexibility, the impact on investment, the impact on the financial services industry and the impact more generally on growth, stability and jobs. So the UK will not join EMU at the outset. But financial firms in London, whatever their nationality, see the euro as a key part of their business. With our support at the Bank of England, they have been actively preparing for the introduction of the euro. London thrives on liquid markets, regardless of currency. So the introduction of the euro is a major opportunity for London. BIS Review 11/1998  -2-  From the start, London will act as a link between New York and the euro area by providing a full range of euro services in wholesale financial markets. That includes euro payments and settlement, so that anyone who wishes to do so will be able to trade and settle in euro in London from the first day of EMU. But it also extends to euro banking, foreign exchange and derivatives trading, bond and equity issuance and trading, fund management, financial advice and professional support services as well. The City of London is Europe’s leading financial centre and one of the top three global centres, alongside New York and Tokyo. Here in New York, the financial centre is influenced by the size of the domestic economy. That is true of Tokyo as well. But London’s success has historically been due to its international financial business.