First, greater clarity on liabilities should encourage more appropriate matching with assets in a way that was absent in the run-up to the crisis – some assets suit a deposit contract, some do not. Second, resolving failed banks without the use of public money depends on a very strong delineation of bank liabilities to make clear what can be bailed in. This is a key to unlocking the answer to the too big to fail problem. Third, as the Bank of England announced in December, we are now in a position to clarify the expected steady state regime for bank capital and because we can distinguish going concern capital  BIS central bankers’ speeches  3  and thus loss absorbency from resolution or gone concern absorbency, we can put a lower number on the former. Clarity is therefore a good thing when it comes to balance sheets. Put like that, the wonder is that so much was unclear in the previous system. And, finally, the same principle holds for assets under management. Make sure investors know the characteristics of the assets they hold and that they are not promised access to their investment on terms or with a promise (explicit or implicit) that is out of line with what financial markets could deliver. Thank you. 4  BIS central bankers’ speeches
Or their domestic policy needs may diverge as a result of economic shocks of some sort - a classic but unique example being German unification, but the recent global economic disturbance is perhaps another example. So the risks of divergent monetary policy needs within the monetary union are real. They are essentially similar to the risks of sectoral and regional divergences within a national currency area. And if there were to be material divergence within the Eurozone the tensions could be more severe than in a national currency area because alternative mechanisms - labour migration or fiscal redistribution through a central budget - which help alleviate regional disparities in the national context - are less well developed at the Eurozone level. Some commentators point to the present inflationary pressures in Ireland as an example of the problems that could arise on the upside as it were - through I’m not sure how far one can generalise from the Irish case. The fact that the UK did not join in the first wave of EMU was a disappointment to some people, including to some of our European partners - but it was also a considerable relief to them - we could have been the elephant in the rowing boat! It was I must confess also a relief to me. If we had joined EMU from the start - and had Eurozone interest rates over the past year or so it is very difficult to envisage how we would have avoided an inflationary boom in this country.