It had suffered from the destruction of the wars and the Depression, and from the loss of Empire and protectionist policies at home and abroad, including capital and exchange controls. In a faltering economy trade in government debt had supplanted much of its international business, sterling had declined as an international currency, and the major British merchant banks and brokers had been overtaken by the investment banks in the US and the universal banks in Europe and Japan. Nonetheless, through all this London remained a leading international financial and banking centre. On some measures, indeed, it retained its position as the leading centre for international finance for all but a few years after the second war. 9 It had the critical mass to keep the skillbase and networks to retain the professional trade in many markets. So, even in the 1960s the Euro markets developed here. 6  Michie, RC “The City of London: Continuity and Change, 1850-1990” Macmillan, Basingstoke and London, 1992. 7  Cassis, Y. “Capitals of Capital. A History of International Financial Centres 1780-2005” Pictet and Cie, Geneva, 2005. 8  Kynaston, D. “The City of London”, Volume II Golden Years 1890-1914. 9  Reed, H. “The pre-eminence of international financial centres”, 1981. BIS Review 29/2007  3  The recent growth of the City of London Over the last twenty years, a number of reforms have improved the environment and helped the City to build on its position.
Among major economies worldwide, the euro area has the lowest interest rates, be they nominal or real, short or long-term. And the ECB has developed a wide range of tools. Quantitative Easing was not created in Europe, but corporate bond purchases, the wide range of eligible collateral, TLTRO or negative rates were developed here. In calibrating our decisions, we look of course at both the stance (based on our desired effect on future inflation) and the effective transmission of monetary policy (is the stance having the intended effect for economic agents, including SMEs and households?). These two considerations are evident in our recent decisions about the PEPP. The purpose of the PEPP is to preserve favourable financing conditions for all borrowers during the crisis phase of the pandemic and thereby prevent inflation from falling even further below our objective. From  Page 4 sur 9 the start in March 2020 and still more since December, we have included the possibility to buy flexibly across time, jurisdictions and asset classes, to ensure that all borrowers benefit from favourable financing conditions. The recent evolution of long-term sovereign rates illustrates our consistency. In January and February, long-term sovereign bond yields in the euro area began to increase, largely reflecting transatlantic spillovers from US monetary and fiscal policies. So we decided in our Governing council on March 11th to conduct our purchases “at a significantly higher pace”, which was implemented promptly and efficiently and limited the rates increase. From mid-April nevertheless, our action has been hampered by unwarranted tapering fears.