development in this country is a case in point. we have been frontrunners when it comes to financial conglomerates or bank assurance, institutions that combine banking, insurance and securities activities. as is well known, the netherlands houses a couple of world ’ s major internationally active financial institutions. most of the major dutch banks currently combine banking, insurance and securities activities. the emergence of these conglomerates was made possible by the lifting, in 1990, of the prohibition on combining banking and insurance activities in one financial institution. as the importance of cross sectoral financial activity increases, so does the need of the supervisory response. the main challenge in this field is to achieve a consistent approach in the supervision at the group level as well as at the level of the entities within the conglomerate. consistency does not imply that the approaches should be identical. it should be interpreted as avoiding the potential for regulatory arbitrage as well as regulatory overlap. again, we try to take the lead in the way we organise supervision in the netherlands. co - operation between bank and insurance supervisors dates back to the early nineties and has performed well. nevertheless in anticipation of a continuation of the trend that i have described, we have come to the conclusion that a cross sectoral approach to supervision is the right way forward. in this approach we make a clear distinction between prudential and conduct of business supervision. it assigns the responsibility for these inherently different objectives to separate authorities. this is not to say that this is the only way to address this challenge. it depends on the specific characteristics of the financial sector in a country which design is best suited. in our case, for instance, we have a highly concentrated financial sector with institutions that are, almost by definition, systemically relevant. as a consequence we considered it essential to link prudential banking supervision with the central bank and its other functions such as oversight of the payment system and providing lender of last resort facilities. but as i said, circumstances and the solutions chosen will vary from country to country. this is fine, as long as the approaches have at least one thing in common : they should be designed with the aim of ensuring consistency. consistency not only in regulation, but also in supervisory practice. this is an important precondition for achieving a level playing field for the international financial industry. let me add, as a final observation, that in achieving this goal, there is an important complementary role to be played by market discipline. meaningful disclosure by financial institutions is a potentially powerful

a h e m wellink : the role of the nederlandsche bank address by dr a h e m wellink, president of the nederlandsche bank, on the occasion of the russia - netherlands economic forum at the hague on 29 october 2001. * * * introduction it is with great pleasure that i ’ ve accepted the invitation to deliver a brief address this morning, not least, of course, because this forum has been organised in co - operation with our colleagues of the bank of russia. at the request of the organising committee, i shall dwell briefly on the main tasks of the central bank of our country, the nederlandsche bank, as well as on the relations with the european central bank. some of you probably also attended the previous conference, held in amsterdam in may 2000, which had ‘ transition to the market economy : actual problems in financial and banking sectors ’ for a theme. one of the items highlighted on that occasion was financial stability. who could have suspected at the time that a mere eighteen months later, on the eleventh of september, an act of unprecedented brutality would put the international financial system under threat? 11 september : also an attack on financial stability on tuesday the eleventh of september, it was soon brought home that the system of ( international ) payments was running the risk of becoming seriously unsettled. it was not at all certain either at that point whether the financial markets would continue to function properly. fortunately, despite some minor hitches, payment systems could be kept operational. even so, the american financial markets did not open again until the seventeenth of september. since that day, the fed, the ecb and several other central banks have cut their interest rates. all in all, the monetary authorities have managed to ward off the acute threat to the financial system by a wide range of monetary measures. their actions were swift and well co - ordinated. presently, the authorities are seeking to cut off terrorist groups from their financing sources by tracking and freezing their bank balances. it may be clear that this is a comprehensive operation for the international banking system. in our country, the scope of the supervisory legislation will be extended to include trust offices and special financial institutions. the existing legislation, such as that governing the disclosure of unusual transactions, will be adjusted as well. these measures all serve to safeguard the integrity of the financial system. i firmly believe that the currency markets would have grown quite restless if it hadn ’ t been for the euro or the ecb. and