expansion of international trade after the end of the cold war fuelled a protracted process of financial deregulation that was halted only by the financial crisis that broke out in 2007. the latter triggered a move toward re - regulation – or better regulation – that is still under way. the pendulum keeps swinging and will certainly continue to do so. the global financial crisis, with its huge costs for the whole society, has caused a further deep erosion of the trust in financial institutions. witness to this are the widespread protests against the financial industry, from the occupy wall street movement to the “ indignados ” in spain and their counterparts in other european countries. anger has been fuelled not only by the discovery of wrongdoings and perverse incentives, but also by a perceived lack of action against those responsible, in a context of exceptionally high remunerations. the integrity of financial intermediaries ’ codes of conduct has been called into question under many dimensions : honesty, the ability to manage financial risks and the commitment to take care of the interests of their clients. in the first place, public attention was caught by cases of investment fraud, in which ponzi schemes or other types of malpractice and malfeasance led many people to lose their savings. feelings were exacerbated by the generous severance packages paid to top managers after distressed financial institutions were rescued with taxpayer money. dubious practices were found in key junctures of the financial systems, such as credit ratings and interbank reference rates, not to mention the allegations of financial institutions ’ involvement in activities related to money laundering and other fraudulent practices. most importantly, the crisis has shown that market participants were not capable of mastering the inherent complexity of the system that they themselves had contributed to develop over the course of the last two decades. favoured by the breakthroughs in information technology and telecommunications, the securitization of banks ’ assets expanded considerably, together with the supply of so - called structured financial instruments ( abss, cdos, etc. ). the traditional model of credit intermediation gave way, especially but not only in the united states, to a system in which loans granted were rapidly transformed into other financial products having these loans as collateral and sold on the market : the socalled originate - to - distribute model ( otd ). to the inherent difficulty of evaluating the quality of loans, these developments added the problem of fully understanding the effective role of structured financial products. structured finance products and the

of the deutsche mark. if there were any country in europe that had full understanding of germany ’ s concerns at that time, it was perhaps my own country, and not only because the netherlands had benefited enormously from the stability - oriented monetary policy of the deutsche bundesbank. the netherlands had also learnt the merits of having a stable currency and low inflation. hence, in the process leading to monetary union in europe, germany was strongly supported by the dutch government and, in particular, by the dutch central bank. indeed, i would say that the netherlands has frequently been an even more ardent defender of the currency stability faith than germany. as a small country, and one known for its directness and candour, the netherlands could often adopt positions and policies that germany, as a big player in europe, could not, or only in a nuanced way. in this context, i should like to thank the german government for the trust it has placed in me as the “ guardian ” of the new currency, to the extent that any one person can perform that task. i also wish to pay tribute to the german government for having the courage to “ sacrifice ” the deutsche mark, a symbol of german identity, and to give its support to the euro, an unknown quantity at that time, in the interests of peace and prosperity in europe. i am of course also very grateful for the kind words expressed by mr. eichel as regards my role in the euro cash changeover. however, it should not be forgotten that the success of the euro so far - in particular the success of the cash changeover should, at least in my view, be attributed first and foremost to the people of europe. without their support, the undertaking would have failed. and without their support for a stability - oriented monetary policy, it would not have been and will not be possible to safeguard the value of the currency. in your speech, mr eichel, you echoed the words in the citation for the order of merit, namely that the european central bank has done well in ensuring price stability in the early years of monetary union, reflected in an annual average inflation rate of 2 % over this period. economic actors share the german government ’ s view in this respect, as is evidenced by various indicators of inflationary expectations. however, there is no reason to be complacent. in 2000 inflation in the euro area was 2. 3 % ; in 2001 it was 2. 5 %. for