of emu. despite a large number of unprecedented adverse macroeconomic and geopolitical shocks during this period, inflation expectations have been firmly anchored, which testifies to the success of the ecb ’ s stabilityorientated monetary policy, and vindicates the public ’ s initial confidence in the stability of the euro. the high credibility and success of the single monetary policy in the euro area rests on two cornerstones : the institutional framework of the ecb enshrined in the treaty establishing the european community, and the ecb ’ s stability - orientated monetary policy strategy. the constituent features of the ecb ’ s institutional architecture are a clear mandate to safeguard price stability in the euro area, and full independence in the pursuit of this mandate. these institutional provisions reflect the key insights gained by academic research and policy experience over the past decades that price stability is a necessary condition for sustainable growth and job creation and that monetary policy decisions are best placed in the hands of an independent central bank. central bank independence is key for monetary policy to be credibly and effectively geared to price stability. the credibility of the single monetary policy, and the continued success of the euro, are therefore fully based upon the ecb ’ s independence, guaranteed by the treaty. the ecb ’ s monetary policy strategy, which comprises a quantitative definition of price stability and a two - pillar framework involving economic and monetary analysis for the assessment of the risks to price stability, provides a comprehensive and consistent framework for conducting our monetary policy, and for communicating with the public. our strategy ensures that we take all information relevant to price stability in the euro area duly into account and pursue our mandate in a steady and forward - looking manner, thereby helping us to take sound and timely policy decisions. in being fully transparent about the ultimate goal of our monetary policy and how we go about achieving it, our monetary policy strategy also makes an important contribution to the credibility and predictability of our policy. this ultimately facilitates the fulfilment of our mandate, as it enhances our ability to guide price and wage setters and financial markets in a way that is consistent with our price stability objective. the beneficial effects of the euro are reflected in the much - improved performance of the euro area economies over the last nine years. i have already mentioned the stabilisation of inflation expectations in the euro area at unprecedentedly low levels, in line with our definition of price stability. a particularly noteworthy development is the marked improvement in the performance of the

. in addition, significant modifications to products, services, and activities or their pricing warrant review as a new product. even small changes in the terms of products or the scope of services or activities can greatly alter their risk profiles and justify review as a new product. when in doubt about whether a product, service, or activity warrants review as a new product, financial firms should err on the side of conservatism and route the proposal through the new - product approval process. cutting short a new - product review because of a rush to deliver a new product to market, or because of performance pressures, increases the potential for serious legal and reputational risk. the determination of whether a new or modified activity requires additional compliance processes, procedures, or controls is clearly the province of the compliance staff. it involves the interaction of business - line compliance staff with personnel responsible for enterprise - wide risk management. once these processes, procedures, or controls are designed, compliance personnel should help ensure that those controls are implemented effectively and are a comprehensive response to the legal and reputational risks posed. the role of internal audit just as the compliance area performs an independent review of the firm ’ s activities and business lines, the compliance program also needs to be reviewed independently. internal audit has the responsibility to review the enterprise - wide compliance program to determine if it is accomplishing the firm ’ s stated objectives, and if it is adequately and appropriately staffed, in light of growth, changes in the firm ’ s business mix, new customers, strategic initiatives, reorganizations, and process changes. internal audit should evaluate the firm ’ s adherence to its own compliance and control processes and assess the adequacy of those processes in light of the complexity and legal and reputational risk profile of the organization. it should be obvious that internal audit, like the compliance program, needs to be staffed with personnel who have the necessary skills and experience to report on compliance with financial institution policies and procedures. internal audit should test transactions to validate that business lines are complying with the firm ’ s standards and report the results of that testing to the board or audit committee, as appropriate. structured transactions there are “ lessons learned ” from the legal and reputational risks that some financial firms faced in structuring transactions for enron and worldcom, among others. those legal and reputational risks require a focus on appropriateness assessments, the enforceability of netting and collateral agreements, undocumented customer assurances, insurance considerations, and potential irs