##uba, the imf stressed synergies with the bank ’ s other tasks. i agree. as i already indicated, at the nederlandsche bank we see important advantages of having various activities under one roof, and i am convinced that this new task will further strengthen the central bank of aruba ’ s position as the guardian of financial stability. ladies and gentlemen, let me conclude. because of the rapid changes in the international financial landscape, central banks need to be flexible, indeed more flexible than in the past. by considering financial stability as their main responsibility, central banks should be able to take up new tasks. both the central bank of aruba and the nederlandsche bank have proven to be flexible organisations. as small, open economies, aruba and the netherlands are more vulnerable to external shocks and therefore have a particular interest in maintaining financial stability at a global level. given this common interest, i am sure that the relationship and kinship between our central banks will remain as close as it has been in the past 16 years.

than other parts of the financial system. given banks ’ pivotal role as both financial intermediaries and providers of payment facilities, problems with one institution can easily cause contagion effects. central banks have an important task in mitigating these risks by offering secure payment settlement systems through which payments can be made in risk - free money. this also implies that central banks need to monitor their commercial counterparts intensively. at the same time, we cannot ignore the fact that commercial banks have become more exposed to other parts of the financial system, implying that our surveillance task should be broadened. for example, banks ’ increasing use of credit derivatives to transfer their risks to institutional investors, implies that these investors ’ ability to meet these financial contracts becomes a relevant factor. let me elaborate a bit on this new development in central banking, and how we deal with it at the nederlandsche bank. what do we mean by financial stability? according to our own definition at the nederlandsche bank, a stable financial system is capable of efficiently allocating resources and absorbing shocks, preventing these from having a disruptive effect on the real economy or on other financial systems. also, the system itself should not be a source of shocks. our definition thus implies that that money can properly carry out its functions as a means of payment and as a unit of account, while the financial system as a whole can adequately perform its role of mobilising savings, diversifying risks and allocating resources. financial stability is a vital condition for economic growth, as most transactions in the real economy are settled through the financial system. the importance of financial stability is perhaps most visible in situations of financial instability. for example, banks may be reluctant to finance profitable projects, asset prices may deviate excessively from their underlying intrinsic values, or payments may not be settled in time. in extreme cases, financial instability may even lead to bank runs, hyperinflation, or a stock market crash. how can we safeguard financial stability? although this concept is hard to capture by clear and observable targets, our definition of financial stability gives some clues. let me mention three. first of all, potential sources of shocks need to be identified. examples of shocks are interest rate hikes, financial crises in other systems, but also non - economic events like earthquakes and terrorist actions. obviously, shocks are hard to predict, but having some idea of their potential magnitude is useful for making financial systems more resilient. a second factor to look into