If the function adds value even under such a scenario, then it will be retained, but if not, then the house concerned sees no long-term future for it. I think the challenge facing financial markets and market participants is to identify where they can add value and which services the consumer will continue to pay for: not all will pass the test and survive. My third theme combines both my earlier ones, and concerns the role of market intermediaries. Disintermediation is an ugly word, but it is a trend that exists today and will I am sure continue to grow in importance. Electronic secondary trading of securities is becoming more common, and we have also begun to see electronic primary distribution - the issuance of securities on the Internet, and, in some cases, without the involvement of an issuing house. Now some people see in this a threat to markets themselves: everything, they fear, will migrate to the web and fragment, with a loss of the BIS Review 15/2000  2  transparency and regulatory framework that organised and official markets provide. I do not share this view, nor do I think that there is no future role for markets and market intermediaries. But I do think that the marketplace of 10 years hence will be very different from the one we have now - just as the screen-based markets of today are very different from the physical market floors of the past. Earlier I offered you a possible motto for central bankers.
If I had to choose a motto for a central banker, I think “better safe than sorry” would be very high on the list! More importantly we collectively showed that the London markets were equal to the challenge - even a once-in-a-millennium challenge - and were determined to make sure that come the first day of the new year London would be “open for business as usual”. What of the coming year? Well, I can predict that, after two years of new year working, we will all be able to enjoy our New Year’s Day bank holiday for a change next year! But beyond that, my crystal ball is no better than yours, and I am afraid that if you are looking for me to predict the course of exchange rates or interest rates over the next 12 months I am going to disappoint you. I would like instead to pick out a few themes which I think will be of increasing importance as the year unfolds. Firstly, I think we will increasingly see a fall in the absolute size of government bond markets, although once again Japan remains the exception. This is already happening here in the UK and in the US, as fiscal surpluses reduce bond issuance, and as the recovery in the rest of Europe continues budgets will increasingly move towards balance there too.