not occur again. another important issue is public regulation and oversight. it is all right to make maximum use of sound self - regulation. but the auditing profession should realize that self - regulation alone does not suffice. like for example financial services, accounting and auditing services are of great importance to society. it is all right that such services are offered on a commercial basis in competition. but as a counterbalance, strong independent oversight has to be established. various initiatives are discussed in this context. it is important not to compromise but to make such oversight independent and powerful. licensing, examining audit practices and disciplinary measures are some of the crucial elements to be incorporated here. let me mention several other important issues that may help to restore confidence and trust. in the accounting area, we have to remember what i quoted from young arthur andersen : accounting principles and their implementation in daily practice have to aim at presenting a true and fair view of what was and is. this general principle has to override detailed rules and interpretations if necessary. it is not easy, it can be subjective and judgemental, it may lack comparability in the details – but in the end it is the only thing that matters. this of course is not something that is relevant to auditors only. it matters to all people involved in the reporting cycle. so it is a matter of education, of awareness and of discipline. regarding auditing, let me highlight a few important issues. partner rotation should be made mandatory. at least for so - termed public interest companies, e. g. listed ones, or financial sector firms. personally, i believe it should be applied more widely as it is a healthy discipline. peer reviews have to be strong and powerful. as a consequence of public oversight, independent reviewers need to be involved. and adverse results should have adequate response and, where necessary, disciplinary measures transparent to the public. strong audit committees can be very helpful to monitor both a company ’ s executive management and its internal and external auditors. they need to comprise independent non - executive directors only and to report to the full board. they are also the appropriate body to monitor the extent to which the audit firm performs consultancy engagements for the audit client, and to set principles and limits for such practice. finally audit firms have to be much more transparent. at least they should be as transparent and accountable as financial sector firms. i refer to what will be known as pillar iii in the new basel capital accord, that will require substantial

klaas knot : monetary policy and the great financial crisis speech by mr klaas knot, president of the netherlands bank, at the third annual nyenrode finance day, breukelen, 28 october 2011. * * * the past four years have been tumultuous for the global financial system and the global economy in an unprecedented way for all of us. the eruption of a systemic financial crisis of quite unusual intensity and international reach has been compared to the widespread shutdown of international capital markets on the eve of the first world war. the violent unraveling of events has shaken many beliefs in the economics profession. and the threat of a collapse of the world economy similar to the great depression has prompted unprecedented policy responses. monetary policy makers reacted to the crisis by deploying both conventional and unconventional tools. in this speech, i want to discuss how the conduct of monetary policy in the euro area has evolved during the different stages of the crisis and the challenges it is currently facing. to put this discussion in perspective, let me start by recalling the ecb ’ s mandate to deliver price stability, as is anchored in the maastricht treaty. pursuing this mandate requires that a number of elements are in place. first, there has to be a credible commitment to price stability as a primary goal of monetary policy. a credible commitment implies that the public ’ s long - run expectations about inflation are anchored by the ecb ’ s definition of price stability – hicp inflation below but close to 2 %. second, monetary policy has to be transparent and monetary authorities must be accountable for their decisions. this implies a need for clear and effective communication. third, monetary policy decisions have to be taken in full independence from political influence. this principle is laid down in the maastricht treaty. it implies the strict prohibition of monetary financing. fourth, monetary policy has a medium - term orientation, given the long and variable lags of the monetary transmission mechanism. fifth, monetary policy is underpinned by a comprehensive analytical framework, which rests on two pillars : the economic analysis and the monetary analysis. i should note that the crisis has shown how the monetary analysis can play an important role in signalling financial imbalances and vulnerabilities. it is an important input in a strategy of “ leaning against the wind ”. finally, monetary policy follows a so - called “ separation principle ”, which distinguishes decisions about the monetary stance aimed at achieving price stability from tools directed at implementing monetary