the maastricht treaty is, without doubt, the independence of the european central bank and of the participating national central banks : in other words, the independence of the eurosystem. the economic rationale for a central bank which is independent of the instructions and influence of political bodies is rooted in the finding that it is generally easier for such a central bank to keep the value of the currency stable on a lasting basis. that higher degree of monetary stability benefits the economy and society in various ways. it increases planning certainty in the economy, which fosters a culture of long - termism. it makes it easier for enterprises to fund investment decisions in the longer term. that generally results in a stronger long - term orientation in economic decision - making. incidentally, that was one of the key considerations when the new government gave greater autonomy to the bank of england two years ago. a stable currency is, at the same time, an element of social policy. it is often precisely those who are not so well off in economic terms who find it difficult — or impossible — to protect themselves against inflation. finally, money which has a stable value is also a factor of political philosophy. confidence in the currency is, to some extent, confidence in the state and its institutions. that is, at least, the case in germany ; partly owing to our experience of galloping inflation in the first half of this century, but also partly on account of the ideas of economists such as alfred muller - armack and ludwig erhard, who introduced into german economic policy the leitmotif of the social market economy, with a stable currency as one key element. this economic rationale has now resulted in a trend towards greater central bank independence outside of europe as well. that is perhaps also one factor — among others — which helps to explain the high degree of price stability that prevails worldwide at present. one fundamental objection to central bank independence raises the question of democratic legitimacy. is a central bank which is independent of political instructions and influence in keeping with a democracy? i believe that there are two preconditions which have to be fulfilled for an independent central bank to be unquestionably compatible with a democratic system. firstly : the assigning of independence and the mandate has to have been arrived at democratically : at the least, by virtue of an implicit consensus and on an explicit foundation provided either by law, a constitution or by a treaty — like that of maastricht — to which the

- management framework the recent innovations in credit risk transfer and complex structured finance transactions offer opportunities for the development of new markets, improved pricing, and better risk - transfer mechanisms that can improve the efficiency of u. s. and world financial markets. however, innovation also presents risk - management challenges. i believe that these challenges are addressed most effectively through an enterprise - wide risk - management framework that provides a structure for dealing with uncertainty and its associated risks and opportunities. as you may know, the committee of sponsoring organizations of the treadway commission, or coso, has published an exposure draft that sets forth an enterprise - wide risk - management framework, including the definition and components of risk management and the roles and responsibilities of various parties. enterprise - wide risk management is a process that involves people at every level of the firm in setting strategy and making operational decisions based on an analysis of events that may impact the firm. through an enterprise - wide risk - management framework, an entity can better limit exposures within its risk appetite and provide its management and board of directors with reasonable assurances regarding the achievement of the organization ’ s objectives. recent operational breakdowns at financial institutions underscore the need for enterprise - wide risk management. as organizations expand into more lines of business, inherent conflicts of interest become more likely. conflicts can arise when a firm offers research on fixed - income securities to investors and underwrites the public offerings of the same securities. and problems may occur if an organization offers compensation designed to encourage officers to increase deal volume without regard for reputational, credit, or legal risks. thus, the traditional approach of managing risks only within individual business lines or functions may no longer be effective. viewing risks across the enterprise can help management and the board of directors not only articulate more clearly the “ most likely ” outcome of a strategy, change in process, or transaction but, more important, focus on a range of possible results to facilitate a discussion of risks and effectiveness of processes to lay off or mitigate those risks. internal controls are an integral part of enterprise - wide risk management. under coso ’ s internal control framework, directors have responsibility for overseeing internal control processes so that they can reasonably expect that their directives will be followed. directors should also keep up with innovations in corporate governance, and this is one key area in which the legal advisers of financial companies can assist their clients. indeed, legal counsel can help lead the way to developing sound practices in corporate governance. while we are discussing the importance