The only possible disadvantage I see would result from the imposition of onerous regulatory or financial burdens -- for example onerous minimum reserve requirements -- which might act to distort activity within the financial sector and/or drive it outside the euro-area altogether. So what then are the prospects for the City if the UK is, initially, out? The current strengths of the City -- as a uniquely international, rather than simply a national or regional European financial centre -- will be familiar to you. They include a vast, critical mass of markets and financial services in commercial and investment banking, securities and derivatives activity, investment and fund management, insurance and commodities and so on, involving an extraordinary concentration of the strongest financial businesses from all around the world. To give just one example, uniquely among the major countries we have more banks which are incorporated abroad operating in the City than domestic banks, and over half of the total deposits of the UK banking system is denominated in foreign currencies, worth over £ trillion -- that’s a one and twelve noughts -- notwithstanding the current strength of sterling. The particular strengths that have contributed to this massive concentration of international business are many and various. They include: the English language; the convenient time zone; the ready availability of the relevant trading and other financial skills as well as professional support services -- in law, accountancy, tax, property, communications and so on. They include effective infrastructure.
But one thing is clear: everyone, in or out, has an unambiguous interest, if EMU does go ahead, in doing everything we can to make it a success. And it is equally clear that those countries that participate in Monetary Union have a similar unambiguous interest in the economic prosperity of countries remaining, at least for the time being, on the outside. Larry Summers, the Deputy Secretary of the US Treasury, writing about EMU in the Financial Times on Wednesday, said: “The US is well served when Europe is vibrant economically and working to open its markets and strengthen its ties with the global economy.” He might have been speaking for all of us here in Europe, in or out, recognising that we have a mutual, and reciprocal, self-interest in each other’s economic well-being. So my general point is this. Whatever the outcome on EMU, it is vitally important that we continue to maintain, and strengthen, positive and constructive relationships throughout the European Union area -- and indeed beyond -- in our national and collective interests. For the UK, in particular, if we were to opt out of the first wave, that certainly means that during our EU Presidency, over the critical first half of next year, we must -- as I am quite confident we will -- do everything we possibly can to ensure that the procedures leading up to the historic decisions run smoothly and that the decisions themselves are timely and, hopefully, harmonious.