So it is very helpful that the EMI Council decided with our encouragement in September to ‘welcome and support’ harmonised market conventions on the basis proposed by the market associations. We also welcome the EMI Council’s decision in September to prepare for the computation by the ESCB of an effective overnight reference rate for the euro area. There remains however a good deal to be done everywhere -- in co-ordinating price sources, for example, as methods of redenomination. But in all of these respects London is well up with the game. Conclusion Mr. Chairman, it is sometimes suggested that a perceived threat to its activity if we were “out” will cause the City to press for early UK membership of EMU, and that this will be an important factor in the Government’s decision. I am bound to say that I see very little sign of this. Certainly there are those in the City who advocate our early participation, but there are equally those who are more hesitant -- just as opinions are divided elsewhere within the country. But for the most part, my impression is that City attitudes to EMU, whether for or against, reflect a broader assessment of the respective pros and cons for the country as a whole rather than strong views about the implications for the City in particular. On the whole I find that City opinion is relatively optimistic about its future prospects, “in” or “out”.
If the Riksbank waits to adjust the repo rate until inflation expectations and inflation have already increased, there is a risk that the delay will be too great. In this type of situation larger interest rate adjustments may be required than if the Riksbank had acted at an earlier stage. This brings me to the current economic situation. However, first I would like to take a brief look back at the events that occurred in connection with the acts of terrorism in September. The Riksbank’s actions following the terrorist attacks on 11 September 2001 After the terrorist attacks in the USA, the entire world was shocked to realise that something so dreadful could happen. The Executive Board made an assessment that the uncertainty caused by the acts of terrorism risked further subduing demand internationally, mainly through the effects on companies’ and households’ confidence in the future, which could result in a more profound and prolonged economic downturn. This was why the Riksbank lowered its interest rate, together with the central banks in the USA, the rest of Europe and several other countries. BIS Review 13/2002  3  Prior to the terrorist attacks in the USA on 11 September, new statistics indicated that the global economic downturn could reach its lowest level at the end of 2001. However the picture was not clearcut. As a result of the terrorist attacks, uncertainty increased even further regarding the time scale for a recovery.