The Bank of England has taken a leading role in discussion with other governments and central banks, and with the private sector market participants, to find a more orderly approach to crisis situations and to avoid the kind of damaging scramble to withdraw funds from emerging market economies that marked the Asian Crisis. BIS Review 102/2000  4  The second area of Bank involvement is market infrastructure, the payments and settlements systems that underpin financial markets. Given the size of payment flows, domestic and cross border, the importance of robust and reliable systems is paramount. Any failure in payment systems would result in gridlock and widespread disruption. The Bank has an operational interest, closer to home, in that payment systems, especially in the wholesale market, often rely on the transfer of payments across central bank accounts. Because of this, under the MOU the Bank is explicitly given responsibility for the systemic oversight of payment systems. In carrying out this responsibility, we take a close interest in the interaction of these systems with other parts of the infrastructure - settlement systems and clearing houses. This interest extends to exchanges and the dizzying process of alliances, mergers and failed bids that has marked the attempt to consolidate global equities markets, especially in Europe where, despite EMU, trading is still widely split between markets. The third area of Bank involvement is regulatory policy.
There is often considerable uncertainty about what the current situation is - a particular problem relating to Q3 as we try to assess the impact of the petrol price crisis in September. Even the past is uncertain and we regularly receive from the ONS revisions to past data about growth of different parts of the economy. As I look at the data each month, knowing that some of the dials are misreading, I am reminded of the saying: that the intelligent man knows that half the data he is looking at is false; the brilliant man knows which half! More seriously we need to have in our mind a view about which data series are reliable and which are particularly erratic. Happily the RPIX data, our goal, is easily observable. But, by way of example, wages, which are a key piece of data, are much less easy to observe. And as we look at the average earnings data, we need to recognise that, not only is it difficult to measure and calculate, it will also occasionally exhibit “noisy” features that may obscure what is going on in the real economy. Indeed, over the Millennium period, as special Y2K bonuses were being paid, it was very difficult to determine what represented real “news” about the economy, and what was mere “noise”. Sitting at the controls of the aircraft, trying to pilot a sensible middle course between the extremes of unsustainable take-off and hard landing, we need “eyes and ears” on the ground.