its relations with frankfurt during its first ten years the ecb has developed excellent relations with its environment here in frankfurt, be it with the institutions of the city or with the population. at the beginning there were still some taxi drivers who did not understand immediately where to bring a passenger who just said : “ european central bank, please ”. today, the situation is quite different. and the ecb has endeavoured to spread the knowledge of what is happening in there. we do that via our publications or our website but also by inviting the public to come inside the ecb. therefore, we participated in the skyscraper festivals of 2001 and 2007, following the example of our forerunner, the european monetary institute which did so in 1996 and 1998. in the framework of our 10th anniversary we held an open day on 1 june, and about 1, 000 visitors could get first hand information of the role and functions of the ecb. in addition, we regularly explain our work to groups of visitors from around the world, and among them of course citizens from frankfurt and the rhein - main area. in 2007 their number reached 13, 500 altogether and each visitor did not only see the ecb but also the city of frankfurt. for completeness, i wish to also mention our taking part in the osthafenfest and in the luminale, during which the großmarkthalle was fantastically illuminated. also, ecb staff participated in dragon boat races and got the enthusiastic support from the public and their colleagues on the banks of the main. the ecb is a european body, and its staff is now composed of nationals from the 27 member states of the european union. every day, i enjoy the multi - cultural atmosphere at the ecb which is stimulating as it brings fresh ideas into our professional life because of the different experiences, work styles and cultural backgrounds only to name a few of the inspiring factors. our daily encounter with the richness of european heritage brought us to the thought to let the public participate in this understanding. we did so by launching the cultural days of the european central bank which we have organised every year since 2003. the basic concept is to feature each time aspects of the variety and affluence of the culture of one of the member states of the european union, and bring it to frankfurt to present it to the citizens of the rhine - main region and beyond, with events covering music, literature, film, and modern dance. furthermore, we offer lectures about different

otmar issing : the watchers conference - theory and practice of monetary policy speech by mr otmar issing, member of the executive board of the european central bank, at a conference jointly organised by the center for financial studies and the european central bank, frankfurt am main, 5 may 2006. * * * theory and practice my long journey from the theory to the practice of monetary policy – the title of an ecb colloquium in mid - march – has come to an end. the watchers conferences have been an important part of this journey in recent years. in one way or another, these conferences have always focused on the relationship between, on the one hand, theoretical advances in and, on the other hand, practical challenges for the design and implementation of monetary policy. in my last contribution to this event i would like to address three issues : the role of monetary analysis, our two - pillar approach and some observations on “ monetary policy activism ”. the role of monetary analysis over the past eight years, one of the most active debates that we have conducted at this watchers conference has concerned the role of money in the ecb ’ s monetary policy strategy and interest rate decisions. in recalling these lively debates, i am reminded of the fairy tale “ goldilocks and the three bears ” : some of you have argued that the role of money in the ecb ’ s strategy is too large ; others have argued that it is too small ; while i have typically responded that it is “ just right ”. we have learnt a lot from these open debates and even more from the practical experience of designing and implementing the single monetary policy. nonetheless, i continue to affirm my initial view. i remain as convinced now as i was in october 1998 that the “ prominent role ” assigned to money in the ecb ’ s strategy is a crucial component of our overall stability - oriented approach, which has proved very successful through the often challenging circumstances of the past eight years. some important empirical findings for the euro area have been reported earlier in this session. to recall briefly : • there is a robust empirical relationship between the “ low frequency ” or “ longer - term ” movements in monetary growth and inflation. • developments in the low frequency component or underlying trend of money growth lead those in inflation with a lag of two to three years – that is, at a horizon that is typically considered relevant for monetary policy decisions, given the lags in monetary transmission. • the observed monetary data are