asset prices. judgement is necessary in addressing asset price dynamics within an overall framework geared to price stability. at the ecb, our monetary policy strategy – with its medium - term orientation and focus on monetary and credit developments – offers such a framework. it ensures that we consider the implications for price developments at longer horizons of financial imbalances and asset price misalignments, which may cumulate slowly. therefore, while vindication is a strong word, we feel encouraged as regards our monetary policy strategy, whose underlying analysis we continuously deepen. concluding remarks let me mention that a number of institutional reforms to the supervisory framework within the european union are currently being finalised. we welcome the new macro - prudential aspects of this framework. they will take concrete form in the creation of the european systemic risk board. the ecb and the eu national central banks stand ready to provide the risk board with their full support. the systemic risk board will endeavour to provide early warnings and issue recommendations that will help to prevent a renewed build - up of excessive risk in the financial system as a whole. such warnings would have been useful in the past : they represent a crucial part of the preventive framework for the future. while financial liberalisation, deregulation and innovation all have the potential to make our economies more productive and more resilient, the financial sector must not forget that it is to serve the real economy, not the other way around. this, above all, requires a change in mentality within the financial industry itself. specifically, the financial industry has to increase transparency, strengthen its management of liquidity and risk, and make its business models more robust. as i mentioned, while maintaining the flow of finance to the real economy, financial institutions must continue to strengthen their balance sheets, by improving their capital and funding positions. the future will no doubt bring further challenges. as concerns the authorities, we will continue to be alert and vigilant, as in the past. and our 330 million fellow citizens in the euro area will surely not tolerate a relapse into excessive risk - taking at the taxpayer ’ s expense. therefore, the financial sector has to secure its future in a responsible and sustainable way. thank you very much for your attention.

aim of the basel system. to conclude, the basel iii document is an important milestone in development of international financial regulation. it has both a regulatory and constitutive dimension : on the one hand, it operates as a further development requiring central banks and other regulators to behave in accordance with its principles in order to strengthen financial stability ; on the other hand it establishes even firmer the basel committee on bank supervision as the pivot of international regulatory cooperation centred on the concept of risk - weight. but basel iii also invites the question of a perhaps different representation of entities taking part in its consultative phases. in this context, it is a logical next step that supervisory colleges encompassing home and host central banks and regulators from this region cooperate in having a greater input in the basel committee ’ s deliberations. not only will this make everyone more aware of the variety of banking practices that exist in this region, but in conferring together at a senior level, during and between college meetings, central bankers and supervisors will secure a reasonable agreement between all parties as the best course on basel iii implementation. the national bank of the republic of macedonia continues to be committed to the adoption of the principles and frameworks contained in the basel guidance papers. in adopting this commitment we take care that implementation is adjusted to our circumstances. in order for individual rules not to harm the bank business in hand specifically, and the economy in general, overall regulation should allow the wise exercise of judgement or discretion by the banks applying it and by the regulator overseeing that application. i wish you, the european banking federation associates ’, a successful meeting today and a pleasant stay in the republic of macedonia. bis central bankers ’ speeches