burkhard balz : european dialogue & finissage closing by mr burkhard balz, member of the executive board of the deutsche bundesbank, of the joint art exhibition of the deutsche bundesbank and the national bank of belgium " building a dialogue. two corporate collections of contemporary art ", brussels, 10 september 2019. * * * 1 welcome ladies and gentlemen, members of the european parliament, representatives of the european commission and the member states, dear tim, dear fellow central bankers, dear olivier, the closing of an exhibition is not an everyday occurrence for a central banker. it is therefore a truly special pleasure for me to be with you here today to bring the joint national bank of belgium and deutsche bundesbank art exhibition to a ceremonious end. for four months, visitors were able to experience impressive works of contemporary art, many of which had previously not been accessible to the public. the exhibition is a first of its kind, and it certainly proved worthwhile. the constant flow of visitors speaks for itself! 2 building a dialogue building a dialogue! this was the ambitious aim of the exhibition. what we wanted was not just a dialogue between the national bank of belgium and the deutsche bundesbank, but also a dialogue between the observer and the work of art as well as between the observers themselves. the careful thought that went into choosing the contemporary artworks for this exhibition and this impressive exhibition site, located in the heart of brussels, have provided the perfect setting for this dialogue. many of the works explore societal and political topics, which do not stop at national borders. architecture and urban development, war, cultural diversity, capitalism and the global financial crisis ; these topics concern us all. they are highly topical even today. i ’ m sure that many of the members of the european parliament and representatives of the european institutions here will agree with me on that score. and for that reason, too, brussels is a very suitable venue for this exhibition : because it is here, where the peoples of europe are in continuous dialogue with one another to find answers to the challenges facing the eu. building a dialogue! this motto applies to us central bankers as well. after all, we share the responsibility for the single european currency, the euro. and our common mandate is clear : to maintain price stability in the euro area as a whole. however, monetary policy is not the only central bank topic where dialog is essential. being responsible for payment and settlement systems i experience on a

accordingly proposed to apply only to commitments that are made after the guarantee has been issued. in this way, a bank ’ s losses are to be carried in the first place by its shareholders and after them by the creditors whose claims pre - date the decision to impose public administration. a basic principle in the management of the swedish banking crisis was just that no compensation would be provided for shareholders if government funds were needed to cope with a bank ’ s problems. this was important, of course, with a view to future moral hazard problems but it was also crucial politically. otherwise it would hardly have been possible to obtain political support for the public funds needed. the unwillingness to adopt an equally strict approach in many asian countries has presumably been a major factor behind the difficulties in dealing with the problems there. the central bank ’ s primary function in this context is to provide emergency lending for acute needs in order to avoid a systemic crisis and aid the work of the new authority. the experience from bank crises clearly demonstrates the importance of incorporating such emergency lending in the general structure for crisis management instead of treating it as a separate measure. this has to do with the great difficulty in practice of distinguishing between liquidity support and support motivated by problems with solvency. at the riksbank we have made very concrete preparations in this field. we have, for example, produced manuals specifying who is to do what and how in various conceivable crisis situations. before turning to monetary policy, permit me finally to underscore that i am well aware of the difficulties of various kinds, not least of an institutional and political nature, that exist at the european level when it comes to composing a clear set of rules of this type. at the same time this conference has strengthened my belief that a development towards a more integrated european banking system can be swift. the least we can do is to prepare ourselves on the national level. it will probably help us managing a crisis at the european level if one would emerge. monetary policy as i mentioned, the work of constructing a new policy with a flexible exchange rate had to start from scratch in the fall of 1992. but in a matter of months the riksbank had prepared a new target for monetary policy. the annual rate of cpi inflation was to be held at 2 %, with a tolerance interval of procedures to handle the same kind of problems exist in e g usa, england and norway. one percentage point up or down. the 2 % target roughly matched the prevailing rate and