resumption strategies of both the utilities and the participants meet sound practices and are consistent with one another. the white paper also proposes that firms that play significant roles in critical financial markets should plan to recover their operations sufficiently so that they can clear and settle trades that have already been executed, as well as complete funds - transfer and other critical operations, on the same business day that an event occurs. the paper notes that an emerging sound practice in the industry would call on these significant players to plan to recover in four hours or less, again depending somewhat on circumstances. to help prepare for a regional event, the white paper encourages greater contingency and assurance testing. as we learned from y2k and again from september 11, testing is one of the vital elements of contingency planning. our white paper recommends that financial utilities and firms that play significant roles in critical markets routinely use or test their recovery and resumption arrangements for the required connectivity, functionality, and capacity. in particular, greater testing between the backup facilities of financial utilities and the backup facilities of their critical members would help the clearing and settlement infrastructure perform more smoothly in the event of a regional disruption. much more coordinated testing among utilities and firms serving different markets would also help in the management of problems involving cross - market clearing and settlement linkages. obviously, in preparing for y2k we engaged in very large - scale testing. in the current context we understand that there may ultimately be diminishing returns from repeated testing and that we must learn from our experiences in preparing for y2k. the industry again is working together to help define reasonable and meaningful tests and to cooperate by participating in them. in the united states, the federal reserve and clearing house interbank payments system ( chips ) have already coordinated their test schedules. the federal reserve bank of new york ’ s payment risk committee, the securities industry association, and the banking industry technology secretariat are working together to address testing and similar issues. as i have said before, this spirit of cooperation in addressing critical, cross - industry problems of business continuity and testing is welcome. swift played a very important role in preparations for y2k and since september 11 has been working to share ideas and coordinate testing with other organizations. i hope the results of your meetings this week will provide additional ideas and the ongoing support necessary to address the difficult issues involved in strengthening the industry ’ s level of testing. swift clearly can play an important role in promoting and facilitating testing. more broadly, swift can adopt

monetary policy practice. therefore, it is highly desirable to discuss the implied risks at different levels : ( i ) first, the risks should be discussed by the staff. ( ii ) second, an evaluation of the risks should be performed interactively by the decision - making body members and the staff ( alternative scenarios can be produced on the basis of these discussions ). ( iii ) third, the risk and the alternative scenarios should be discussed by the decision - making body members during the policy meeting. it is clear that all the above - mentioned properties can be satisfied when either a bank board or a policy committee are making the decisions. over the years it has been proven that both systems can work well. on the one hand, a policy committee automatically encompasses the property of separateness and the full devotion of its members towards monetary policy. on the other hand, bank board members are probably identified more closely with the institution and offer a more diversified view of policy conduct. indeed, it is really difficult to distinguish which system is superior ; the prevailing solutions are determined by tradition and other local conditions. nevertheless, what is, in fact, of critical importance is the legal framework that is used as the background for the decision making. the decision - making body ’ s mandate should arise directly from the central bank law, or even the constitution, and should be sufficiently ‘ clear ’. any internal agreement shifting policy responsibility towards somebody who is not explicitly referred to in the central bank law, and thus assumed to be policy responsible, could be highly vulnerable and unstable. this could become apparent as soon as a period of tough decisions arrives. the implications of all this can be split in two groups. the first group covers a rather general implication that can be summarized as : the policy decision - making role should be performed by a body that is well defined in the central bank law. in addition, regardless of whether the decision - making body is a bank board or a policy committee, it should fulfil the properties of diversity of opinions, regularity, separateness, staff independence, openness, and dealing with uncertainty. the second group of implications then offers more a practical view which can be summarized as follows : a ) the ‘ policy decision - making ’ body should have a strong background in law, b ) the meeting devoted to monetary policy should not deal with any other issue, c ) the forecast and economic analysis should be submitted by the staff so as to constrain ‘ information filtering ’, d ) the decision makers should