however, in order to enhance these models, efforts are being made to develop models suitable for forecasting in real time – in particular, large factor models and var models and their applications in real time. moreover, the bundesbank is devoting considerable research activities to the further development of the monetary analysis. in particular, ongoing research projects are investigating the information content of various monetary aggregates for future inflation. outlook for the conference as you can see, topics concerning forecasting methodology are always at the top of the research agenda for eurosystem central banks. i have highlighted some aspects that lie at the heart of each and every central bank engaged in forecasting, and i have mentioned a number of issues that are particularly relevant to the state of play in the eurosystem in general and the bundesbank in particular. of course, there are still more open questions than issues resolved. but if it were the other way round, conferences like this would be superfluous. in this respect, we look forward to hearing of new approaches during this conference. i wish you stimulating discussions and a productive meeting. thank you for your attention. see, for example, the various approaches used to establish the role of money for future inflation by gerlach and svensson ( 2003 ), gerlach ( 2004 ), gerlach - kristen ( 2005 ), and hofmann ( 2006 ).

not also involve surrendering national sovereignty – because if liability and control are not in step, the basis for monetary union will be undermined. will the ecb become a superpower if, from 2014 onwards, it has responsibility not just for price stability but also for supervising europe ’ s 200 largest banks? let me say first of all that we at the bundesbank regard banking union in principle as a very important and appropriate step in the process of strengthening the future institutional framework of monetary union. the purpose, amongst other things, is to put in place effective supervision and a strict regulatory framework which will loosen the current close links between the risks arising in a country ’ s public finances and the health of its banking system. when important decisions like this are being made, careful planning should take priority over speed. in our view it is particularly important to prevent conflicts of interest between banking bis central bankers ’ speeches supervision and monetary policy. i do not regard this issue as having been satisfactorily resolved yet. can the planned mediation panel resolve the problem? there are to be three bodies looking after banking supervision in future, starting with the supervisory board, which will operate within the ecb and prepare decisions for the ecb governing council. the governing council will only be able to simply reject or accept these decision - making proposals – it will not be able to amend them. i find this curious : if i am to bear political responsibility, i have to be able to shape the decisions. but that is not all : if the ecb governing council rejects a proposal from the supervisory board, and one country does not agree with this decision, then a third body comes into play – the mediation panel. this mediation panel then decides by simple majority. but the panel ’ s decisions cannot be binding : under the relevant eu legislation the ecb governing council has to have the final say. sounds like a complex construct that makes little sense. why are things being done this way? it is an attempt, using a legal basis which is not really suitable, to erect a chinese wall between monetary policy and supervisory tasks. but it is more like a japanese wall or a room - divider. all this leads to is a very complex system in which the lines of responsibility are blurred. in my view, it would be preferable to amend the eu treaties with a view to putting in place robust separation between monetary policy and supervisory decision - making structures. isn ’ t such a separation at the ecb just theoretical anyway?