willem f duisenberg : challenges to the ecb ’ s monetary policy speech by dr willem f duisenberg, president of the european central bank, upon receiving the european banker of the year award on behalf of the governing council of the ecb, frankfurt, 16 may 2002 * * * introductory remarks lady mayor, karl - otto, andrew, distinguished guests, ladies and gentlemen, on behalf of the governing council of the european central bank, may i say that it is a special honour to receive the european banker of the year award for 2002. the council, which in two weeks ’ time will have been directing monetary policy for three and a half years, is proud to be the recipient of this prestigious award. since it was set up in june 1998, the governing council has discussed and deliberated in an atmosphere of collegiality and consensus. the search for broadly shared resolutions within the council has ensured that a balanced judgement could be reached regarding the true state of the euro area, which covers a vast geographical area and comprises highly diverse national economies. the council ’ s consensual approach has fostered a long - term perspective and preserved continuity with our past. seeking and obtaining a broad consensus on policy decisions and then explaining them carefully to the public on the basis of euro - area aggregate evidence has a threefold effect. it shields governing council members from pressures originating in their home countries ; it imposes a discipline on monetary policy by having a continuous, multilateral check of time consistency and policy direction within the council ; and it counters any public suspicion that a national bias may inform policy decisions. internal governance has been an essential tool in the response to the many challenges confronting the ecb since its earliest days. at the start of economic and monetary union we were faced with the extraordinary task of having to conduct policy with limited area - wide data, with several conventional statistical indicators still under construction and, of course, with the euro area undergoing a major regime shift. moreover, we were hard pressed - following the asian and russian crises in 1997 and 1998 - to handle a difficult and unpredictable situation which some thought would spiral further downwards. and at the same time we had to attend to the unique task of laying the foundations for our future action, thereby completing the work that had been initiated by the european monetary institute. the ecb had to be guided towards full possession of the necessary economic details about a new and unique monetary area with an economic weight comparable to that of the united states. so it must

mr mcdonough focuses on the importance of risk management techniques and the enhancement of market discipline remarks by the president of the federal reserve bank of new york, mr william j mcdonough, before the bond market association in new york on 21 / 1 / 99. good morning. it is a pleasure to be here today and i thank the bond market association for giving me this opportunity to share some of my thoughts about supporting the resiliency and liquidity of our capital markets. as you recall, last august the russian government announced an effective devaluation of the ruble and declared a debt moratorium, shocking investor confidence all over the world. against the backdrop of weakened economies and financial markets in many developing countries, global equity and debt markets became increasingly volatile. in the u. s., a number of market observers had anticipated a correction in stock prices. however, the simultaneous and abrupt widening of credit spreads went far beyond the expectations of investors and financial intermediaries. we are all familiar with the immediate consequences of these dramatic events. what is most important, it seems to me, is to try to understand what public and private entities can potentially do to prevent, mitigate, and manage financial uncertainty in the future. in the face of the recent events in brazil, the launch of the euro, the countdown to y2k, and the extraordinary market volatility of the last 18 months, all of us are obliged to think carefully about our responsibility to support the functioning of liquid and efficient financial markets. one conclusion seems clear : prudent risk management by a critical mass of firms will not only help to ensure a safe and sound financial system, but also will reward individual institutions with longterm profitability. in my view, market discipline, enhanced by appropriate regulation and supervision, offers the only realistic path for us to achieve our goals of a strong and stable marketplace. today, i would like to focus my comments on the importance of risk management techniques and how market discipline can be enhanced to the benefit of public and private sector participants alike. a series of market events over the past year and a half, beginning with the devaluation of the thai baht in july 1997, had a major impact on many lenders and investors, revealing in the process several shortcomings in risk management techniques. one lesson financial institutions learned from these events was the need to continuously reassess both counterparty credit risk management techniques and assumptions about market liquidity. broadly, financial institutions learned that