Willem F Duisenberg: From the EMI to the ECB  Speech by Dr Willem F Duisenberg, President of the European Central Bank, at the Banque de France’s Bicentennial Symposium, Paris, on 30 May 2000. *  *  *  Ladies and gentlemen, it is a great pleasure to address such a distinguished audience on the occasion of the Banque de France’s bicentenary. Surviving for two hundred years in a sometimes turbulent economic and political environment constitutes a notable achievement. I am pleased to be able to congratulate my French colleagues and the Bank itself on this significant accomplishment and look forward to their continued success in the future as part of the Eurosystem - our name for the European Central Bank (ECB) and the eleven national central banks that introduced the euro in January 1999. The long history of the Banque de France stands in stark contrast with the youth of the institution I represent today. Tomorrow the ECB will complete its first two years of existence. During this time, the introduction of the euro and the subsequent conduct and implementation of the single monetary policy have, in my view, been a remarkable success. Most importantly, the basis for lasting and credible price stability throughout the euro area has been solidified. Price stability has, in turn, helped to create an environment where economic activity and employment can flourish. Economic prospects in the euro area are better now than at any time for more than two decades.

At a fundamental level, I wonder whether the crisis has engendered the most important reform of all – the development of a true credit “culture”. While necessarily a longer-term process, the existence of a sound credit culture is the sine qua non of long-term financial stability. Improved disclosure requirements for nonperforming loans, for example, will be meaningless to the BIS Review 64/1998  -5-  extent that credit standards are weak to begin with, or that there is widespread tolerance regarding the restructuring of past-due loans, motivated by an unwillingness to admit that the loans are troubled. Further enhancements to the bankruptcy and legal codes to increase the efficiency and transparency of collateral recovery are equally necessary. While supervisors have made tremendous strides to effect comprehensive, consolidated supervision globally, significant work remains to be done (and perhaps always will). The rapidly evolving international financial system, in which institutions operate to a greater degree across national borders through a variety of entities and, increasingly, in combination with securities underwriting and insurance businesses, poses continued challenges to supervisory frameworks organized primarily on a national, legal-entity, and business-specific framework. The existence of parallel, offshore, and other unregulated structures also will continue to present obstacles to the full implementation of comprehensive, consolidated supervision on a global basis. Managing these issues will require intensified coordination and information-sharing among international supervisors. Authorities need to ensure that capital adequacy guidelines keep pace with developments in internal risk measurement techniques and changes in the business of banking.