The Deputy Governor discussed:
- World economic prospects 'An optimist could make a case... that prices will decelerate faster than is generally expected' and that 'sustainable non-inflationary growth might be nearer than we think. On the other hand, a pessimist could point to serious downside risks'.
- Prudential standards '... in the first flush of exuberance in the euromarkets after the 1973 oil shock... there was often inadequate assessment of individual country risk... Now, however, there is a danger that we might see the converse. At a time when banks have been made rather more sharply aware of the risks involved in their exposure to particular countries in difficulties, there could be a problem if they began more generally to withdraw from, or at least to run down their involvement in, individual countries or groups of countries, without a fully balanced assessment of those countries' positions... Excessive prudence can be as dangerous in some circumstances as excessive exuberance in others.'
- Financial sanctions on Argentina '... the Bank of England was asked to administer the restrictions as agent for the Treasury-a role with which it was familiar from the days of exchange control. However, there are significant differences. This was not to be fully-fledged exchange control against Argentina, but a limited operation designed to freeze Argentine assets in this country and to limit the ability of Argentina to obtain new credit from international markets... The maximum pressure would be achieved if Argentina continued to meet its obligations and it was denied new sources of funding.' 'Suggestions that the restrictions have been applied in a lukewarm manner are... both false and misconceived. '
The need for flexibility in international banking - Deputy Governors speech