George reassures banks on EMU
Tuesday 17 September 1996
Mr George was launching an attack on proposals by France and Germany that would restrict access by countries outside the single currency area to a new interbank clearing system called Target, which will handle euros.
However, he rejected City suggestions that discrimination would cause serious damage to the competitive position of British banks, saying that there were many alternative routes they could use to clear funds in euros, bypassing Target. The issue was not a "showstopper" for the City of London.
Mr George also made clear that he believed the City would benefit from a single currency whether or not Britain joined monetary union.
He took this view, not because London would steal business from Frankfurt and Paris, but because an enlarged currency block based on the German mark would stimulate extra activity in the financial system, benefiting everybody.
Mr George said: "Provided we are properly prepared, as we will be, the opportunities for the City far outweigh the risks, and that is true whether we are in or out."
He also reiterated his longstanding view that Britain was an unlikely candidate for participation in the start of monetary union.
Introducing the bank's second progress report on preparations for monetary union, Mr George insisted that the argument over Target was an issue of principle.
He said that the Bank of England was keen to encourage use of Target because it was a real time settlement system for euros, in which large money transfers would be made instantaneously between banks, rather than at the end of each working day.
Real time settlement removes the risk that the failure of one bank will bring down many others in a domino series of collapses. British banks have already adopted a real time settlement system for sterling and most countries are moving in the same direction.
Mr George said that the Bank was only demanding access to Target on equal terms during the trading day, not asking to be allowed to participate in overnight lending using Target.
Comment, page 19
- 1 Alan Rickman admits editing 'terrible' script with friends in Pizza Hut behind backs of writers on Robin Hood: Prince of Thieves
- 2 Rarest Beanie Baby of them all could be sold for £62,500 on eBay
- 3 Professional big game hunter Ian Gibson crushed to death by elephant during hunt
- 4 Farmer told to tear down mock-Tudor castle after hiding construction behind hay bales
- 5 Rebecca Francis accuses Ricky Gervais of using 'influence' to target female hunters after receiving barrage of death threats
Migrants crossing the Mediterranean: Pope Francis joins calls for EU action on boat refugees
Yemen crisis: Meet the child soldiers recruited by the Shia Houthi rebels who have forsaken books for Kalashnikovs
Alan Rickman admits editing 'terrible' script with friends in Pizza Hut behind backs of writers on Robin Hood: Prince of Thieves
Rarest Beanie Baby of them all could be sold for £62,500 on eBay
Isis in Afghanistan: Group claims responsibility for Jalalabad suicide bombing that killed 35
The only black face in the Ukip manifesto is on the page about overseas aid
If I’m being racially abused I don’t need a stranger with a saviour complex to rescue me
Ukip is the only main political party to not address LGBT rights in its manifesto
Food banks: One million Britons will soon be using them, according to Trussell Trust
BBC election debate: The one photo that summed up the whole 90-minute leaders debate
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
iJobs Money & Business
£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...
£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...
£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...
£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...