– which seems warranted given the ongoing tensions in the euro money market, including, and especially, in the longer - term sector. although there have recently been some identifiable signs of easing in several financial market segments, it is still too early to give the all - clear. specifically, the still elevated level of money market spreads underlines the fact that there is no room for complacency. in this context, i would like to stress two points. in the eurosystem, we have strictly separated our management of aggregate liquidity conditions from the determination of our monetary policy stance. hence, when deciding on interest rates, the primary objective of the governing council has been ( and will continue to be ) price stability. against the background of the continuing and persistently strong upside risks to price stability, the governing council is in a state of heightened alertness and in readiness to act. moreover, our strict separation makes clear that the eurosystem does not intentionally and directly offer some sort of ex post insurance to financial market participants who have engaged in excessive risk - taking. this is intended to limit moral hazard to a large extent. apart from this, it seems appropriate to point out that, in a free market economy, central banks ’ liquidity support must always be confined to a transitional period. in other words, in the medium run, central bank interventions cannot substitute the need for financial intermediaries to regain confidence gradually. at the top of the list of requirements, i would like to see financial intermediaries trying to enhance their transparency regarding credit and market risk exposures and also, if necessary, raising capital and adjusting business models. furthermore, it is essential that financial intermediaries convince investors that the financial system as a whole is capable of managing risks adequately in a setting of continuously changing financial market trends. finally, taking a step back from crisis management, the recent financial market turmoil has underscored the need for crisis prevention to be strengthened. this is exactly what is taking place at the moment. national, european and international forums and organisations are currently putting a lot of effort into identifying the lessons to be learned. there are various initiatives under way, but it is particularly important that the recommendations made by the financial stability forum are implemented rapidly and effectively. the implementation of these recommendations, including those on disclosure standards and risk management, will be a major step forward in enhancing the resilience of the international financial system. financial integration in the euro area if i were governor of a central bank

icelandic companies have been undervalued by the markets, for example relative to comparable businesses in other countries, and another that bold and determined investment ventures have driven up their value. but risk and gain often go hand in hand. sometimes the stakes may be raised too high. it has long been customary to pay a premium for attractive investment options. such goodwill used to be depreciated in companies ’ accounts over a long period and rarely affected their operations. the situation has changed whereby companies now need to make impairment tests of the goodwill they enter on the asset side of their balance sheets. if their original ventures fall flat, the goodwill must be depreciated accordingly. thus there is a risk, if conditions deteriorate, that this rule could amplify a company ’ s negative results at the worst possible time. goodwill totalling more than 500 b. kr. was entered in the financial statements for 2006 of companies listed on iceland stock exchange, and at certain companies, goodwill and other intangibles account for more than half of the total assets on their books. this is a cause for some deliberation. although the central bank ’ s main function on occasions such as this is to draw particular attention to causes for concern, it should of course take note, like everyone else, of the factors conducive to strengthening the long - term economic outlook. iceland ’ s economy is advanced, transparent and vibrant. its strong fiscal position is exemplary, and the population is relatively young, well educated and quick to adapt to technological and scientific innovations of all kinds. a strong pension system has been built up and – unlike other countries that have great fears about the future of their pension systems and their sustainability – it is clear that iceland ’ s pension system is becoming increasingly stronger. admittedly it is still not mature enough to have begun to pay out a representative proportion of its owners ’ lifetime earnings, but this proportion is growing every year and all the pointers indicate that, for the foreseeable future, it will be highly sustainable. thus the pension system is going from strength to strength in iceland, at the same time as significant weaknesses are coming to the fore in many comparable economies. real incomes in iceland rank with the highest in the world, and unemployment with the lowest. large - scale investments have recently been made which will generate handsome export revenues. traditional sectors currently enjoy secure markets and high product prices. undeniably this picture looks very bright and many more positive signs could