. what practical changes would this bring to the work of banking supervision? the changes are of a regulatory and administrative nature. a large part of them have been prepared already and we are ready for their introduction on the date of our effective accession. under the close cooperation mechanism the ecb exercises direct supervision over the largest banks and there the bnb will be involved with the participation of bnb ’ s experts in the supervisory teams. an ongoing active exchange of supervisory information will be established between us and the ecb concerning the other banks that will remain under bnb ’ s direct supervision. countries like hungary, poland and especially the czech republic are markedly against joining the eurozone at this point. is the currency board the main difference between them and bulgaria which explains this discrepancy between policies, or are there other factors at play? 1 / 3 bis central bankers'speeches this is a political decision, above all. what ’ s positive in our case is that this decision is based on strategic and not conjunctural considerations. practically, there isn ’ t a serious political factor in our country that does not support this decision. on the technical level, the monetary regime in bulgaria allows for its implementation to happen quicker and seamlessly. you said in an interview for market news this spring that the downturn in europe could turn out to be temporary, but that would remain to be seen. how would you comment the developments in recent months? uncertainty is on the rise and a lot of current data indicates a continuing economic downturn in the eurozone. this motivates the ecb to make decisions for an even more stimulating monetary policy. the technical details and the degree to which the ecb decided to step up its policy are a subject of debate, but the basic macroeconomic motivation behind these decisions is clear, in principle. responding to a question by investor. bg, bnb says that given the lev ’ s fixed exchange rate, delaying the entry into erm ii cannot create direct financial and macroeconomic risks for the bulgarian economy. could the opposite happen, however? is it possible for erm ii membership to be negative for bulgaria if it comes during unfavourable times for the european economy? to put it in different words, should we be in a hurry for the eurozone or should this goal be consistent with the conditions and trends for the time being? we should follow our strategic plan with a focus on the quality of the process. due to the nature of our monetary regime

lorenzo bini smaghi : monetary policy transmission in a changing financial system – lessons from the recent past, thoughts about the future speech by mr lorenzo bini smaghi, member of the executive board of the european central bank, at the barclays global inflation conference, new york city, 14 june 2010. * * * i wish to thank luca benati, jose luis peydro - alcalde, massimo rostagno, jens tapkins and flemming wurtz for their contributions to this speech. i remain solely responsible for the opinions contained herein. introduction it is a great pleasure for me to participate in this conference. since the crisis erupted, in mid - 2007, central banks throughout the world have conducted their monetary policies using new instruments and techniques. are these changes temporary, and linked to the effects of the financial crisis? or do they mark more lasting changes in the transmission mechanism of monetary policy? these are important questions to understand the role of central banks in the current crisis and in the future. the simple answer is that monetary policy operates through financial markets, markets that have changed substantially over the last decade. monetary policy cannot be implemented without taking these changes into account. however, since central banks have to be accountable, they need to explain how they reflect these changes in their monetary policy operations without changing their underlying objective. i will try to address this issue by dividing my remarks today into three main parts. first, i will review trend developments in financial intermediation and single out a recurring theme in the evolution of the financial markets over the last 30 years : the rise of securitisation and collateralised finance. i will then consider the consequences of this innovation for the transmission of monetary policy in the post - crisis world. i will start by looking at the money markets and turn to the wider financial system, including the shadow banking sector. looking forward, the main sources of collateralisation will be an issue to consider if the present trend towards downscaling the creation of private asset - backed securities continues. public debt instruments are likely to play an important role. this will lead us to reflect on the role of central banking at a time of high public debt. 1. the rise of collateral the financial system has undergone profound changes over the past few decades. markets have grown significantly ; competition has intensified. these are well - known phenomena. i would like to focus on the consequence of this, namely that the core of financial intermediation has moved from depository