Bank of England

Speech by E A J GEORGE, GOVERNOR OF THE BANK OF ENGLAND, to the British Chamber of Commerce in Hong Kong on Tuesday 23 September 1997

I've chosen to speak about EMU - under the title of "One currency, fifteen countries?" - and I emphasise the question mark....

I don't think one can go so far as to argue that a single European currency is a necessary complement to the European single market - any more than one can argue that exchange rate fixity is necessary to achieving benefits from free trade internationally....

Essentially, the downside is that there is a risk that the single monetary policy - the single short-term interest rate - throughout the euro-area, which is a necessary corollary of the single currency, may not, in the event, prove to be appropriate to the domestic needs of each of the participating countries....

There is no doubting the political determination of most of Europe's leaders to press ahead. But unless, in any particular case, they are convinced that genuine, sustainable, convergence has indeed been achieved, it is difficult to see why the country in question should want to adopt the euro or indeed why it should be permitted to join, putting others at risk.

EMU is, after all, forever - and that seems a very long time to me. I don't really understand the hurry... more.....................

Bank of England