the collateral framework serves as a good example. namely, the fact that an asset is eligible as collateral for the eurosystem ’ s operations increases its value for the holder and leads to a premium reflecting this value. the operational framework thereby influences the pricing of assets, and possibly also market participants ’ willingness to accept them. moreover, the fact that there is a single list of acceptable collateral has contributed to an increase in the cross - border use of collateral and thereby played an important role in fostering european financial integration. 3. evaluation of the performance of the framework under stress since its inception the operational framework of the eurosystem has been put to the test on several occasions. one such occasion was the management of the cash changeover in early 2002 ; another test of the resilience of the framework came after the terrorist attacks in september 2001. the present market turmoil provides a new challenge to the framework, perhaps the biggest so far. let me briefly summarise the way in which the different features of the framework have proved to be important. first of all, the flexibility of the operational framework has proven to be extremely valuable, because it has allowed the ecb to adjust its liquidity supply at any time in line with the changing demand for central bank balances. in this regard, let me stress one particularly important feature of the framework, namely the strict separation of actions related to liquidity policy from the monetary policy stance. the technical measures that have been employed over recent months have – contrary to widespread belief – not had an impact on the overall liquidity provision, defined as the banking sector ’ s current account holdings with us. this is because all the additional liquidity provided has subsequently been compensated for by means of the provision of less liquidity later on. what has changed has simply been the timing of the provision of liquidity to banks. it is important to stress this – particularly at the moment, with risks to price stability clearly on the upside – in order to avoid a misunderstanding regarding links between liquidity policy and inflation. the second feature of the framework that has proved to be very useful has been the large number of counterparties in the ecb ’ s operations. the ecb has been able to reach a large number of banks in its open market operations at a time when the money market has been working imperfectly. as a result, the eurosystem has continued to be able to strongly influence money market rates. third, several features of the collateral framework have been important, notably

willem f duisenberg : the european central bank, the eurosystem and the european system of central banks speech delivered by dr willem f duisenberg, president of the european central bank, at the ceremony to inaugurate the new building of the banque centrale du luxembourg, luxembourg, 18 may 2001. * * * your royal highness, prime minister, governor mersch, distinguished guests, allow me first to congratulate you on the inauguration of the new premises of the banque centrale du luxembourg. you decided to name parts of them – very appropriately, i find – after pierre werner, the author of the first blueprint for economic and monetary union in europe. his report of 1970 laid the conceptual foundations for many aspects of the institutional set - up and policy framework of today's european central bank ( ecb ) and european system of central banks ( escb ). most significantly, werner presented a lucid account of a fundamental requirement of monetary unification in europe : no single currency without a common central bank, or rather a " community system of central banks ", as he called it. the distinctly federal character of what werner saw as the future european monetary authority was in itself a reflection of the fact that europe is not a single nation, but a group of nations. twenty years later, the treaty on european union established the european system of central banks, with the european central bank at its core, and transferred to it the task of conducting a single monetary policy. in addition, the authors of the treaty recognised that a functioning monetary union requires centralised decision - making and harmonised governance over all those tasks which are closely related to monetary policy. consequently, responsibility for the management of foreign exchange reserves, for activities to support the oversight of payment systems, for the collection of euro area - wide statistics, for measures to ensure financial stability and for the issuance of banknotes has also been assigned to the escb. at this point, i should like to clarify that, for as long as there are eu member states outside the euro area, all these tasks are being carried out by what we call the eurosystem, rather than by the escb as a whole. the eurosystem comprises the ecb and the national central banks ( ncbs ) of the euro area member states. the eurosystem's clearly defined policy responsibilities, together with its independence, the strict orientation of monetary policy to stability and the federal institutional model could be regarded as the cornerstone