it is not always possible simply to put the good ones into the pot and the bad ones into the crop, to paraphrase the grimm brothers. for one thing, we cannot ignore the problems of where to draw the line and how to put this into practice. in particular with regard to corporate services, it is not quite that easy to make a clear distinction between traditional banking services and investment banking services. and, problems in drawing a clear boundary generally result in loopholes. in terms of financial stability, however, a much more serious issue is at stake. one of the proposals for a specialised banking system currently on the table – the vickers blueprint – would distinctly reduce interlinkages, which is welcome as far as its effects on financial stability are concerned. however, that would probably not close off every possible contagion channel. banks are interlinked through all sorts of other channels. not least, during the financial crisis, in order to prevent contagion, in particular, governments also gave support and assistance to many investment banks or – as i would call them – quasi - investment banks. bis central bankers ’ speeches the lehman brothers bankruptcy caused precisely such contagion, but not because customer deposits were at risk. rather, it had many connections to other financial institutions including, and above all, as counterparty in derivative transactions, in which lehman brothers was particularly heavily exposed. essentially the same applied to aig – which was not even a bank, but an insurer. aig was also a major counterparty. in this case, too, the government rescue package was intended to keep further shock waves from buffeting the financial system. and in the case of the largest rescue operation in germany, that to save hypo real estate, customer deposits were not the main issue, either, but rather the danger of wide - ranging domino effects – on other banks ; on the pfandbrief market, for which the affected institution was a major issuer ; and for insurers, for whom pfandbriefe are key investments. not everything is rosy even in classical banking business. the very large banks – those deemed “ too big to fail ” – are not the sole sources of systemic risk. the spanish case has made this abundantly clear. here, banks were destabilised by their exposure to the realestate market. these vulnerabilities were created in traditional lending business. proponents of specialised banking systems believe this will produce a better solution to

, and this will make installation and communication easier. this solution is expected to be available from the start of 1999. s. w. i. f. t. ’ s role in stage three of emu is being extended, since the eu central banks have decided to use s. w. i. f. t. as a carrier for the cross - border target system. this means that s. w. i. f. t. has taken on an even greater amount of responsibility. in particular, this includes the commitment to ensuring smooth and trouble - free operation. it is my belief that the high standard set by s. w. i. f. t. in the past will ensure that the target system will operate smoothly, too. this is borne out by the first - rate spirit of cooperation and the transparency provided by s. w. i. f. t. - not least with respect to the auditing by the belgian central bank. overall, i am optimistic that swi. f. t. will also master future challenges, such as the year - 2000 problem. outlook however pressing and topical the centennial project of emu may be, the example of the year - 2000 problem makes us realise - if we have not done so already - that cooperation in the field of payments must not stop at europe ’ s borders. europe must look beyond its own immediate concerns in order not to become isolated. the eu central banks will therefore continue their dialogue with central banks throughout the world. the introduction of the euro will, in any case, not leave third countries unaffected. credit institutions outside the eu will restructure their correspondent banking relationships and possibly find new counterparties. concentration on a small number of access points to the euro area will offer them the opportunity of easier liquidity management. this will also strengthen competition between european financial centres. issues of this kind relating to competition also came into the, often animated, negotiations on connecting the “ out ” central banks to target. at times these central banks had feared discrimination. on the other hand, they do happen to be outside the euro area and cannot therefore benefit from all the advantages of the single currency area. off - shore centres must play a neutral role in terms of monetary policy - something which, in my view, made the imposition of conditions indispensable. i believe, however, that we must not forget that these countries will one day become fully - fledged members of emu and that procedures will then be harmonised in