the directors of the bank in a foreign country for looking after the interests of creditors and other clients of the bank branch in new zealand? under existing policy, foreign banks are able to operate as branches in new zealand unless they have substantial retail deposits or are deemed by the reserve bank to be systemically important. in such cases, they must operate as locally incorporated entities. where they do operate as branches, we impose certain prudential requirements on them and require disclosure of the new zealand branch operations, but we place considerable reliance on the directors of the foreign bank to ensure that the affairs of the bank as a whole are being prudently managed. we recognise of course, that this approach has its limitations. in particular, we know that the directors of a bank, and the corporate governance and risk management structures within a bank, do not generally draw distinctions between the foreign branch of the bank and the rest of its operations. we are also mindful that the foreign branch of a bank is legally indistinguishable from the rest of the bank, and that assets and liabilities can move quite readily, sometimes at the push of a button, between the branch and the rest of the bank. in fair weather, that is fine. but in times of crisis, the distinction between the branch and the rest of the bank, and the legal location of assets and liabilities, may well become very important indeed. you might think that the problem associated with branch banks could easily be solved by simply requiring banks to operate in new zealand as locally incorporated subsidiaries. many of the banks currently in new zealand do just that. but even here there are corporate governance and related complications. increasingly, both in new zealand and elsewhere, international banks are managing their affairs as a global business, regardless of whether they operate in foreign jurisdictions as branches or subsidiaries. core functionality, such as information technology, financial accounting and risk management, is being increasingly managed on a global level. in some cases, this is being done in a banking group's head office. in other cases, core functionality is being located in developing countries to take advantage of lower cost structures. in both cases, the legal boundaries between different parts of a banking group are becoming less relevant. and all of that is probably just fine when things are going well. but when things do not go well - such as in a bank failure situation - the legal divisions within a banking group and the location of core functionality become very important indeed. and it is precisely this issue

. and, as i just said, over the first twelve years we have delivered average yearly inflation at the level of less than 2 % : it is a better result than the previous national currencies over the last 50 years, including the deutsche mark. here in aachen, i can say, the promise “ stark wie die mark ” has been fully respected. since the crisis we also had to cope with financial turbulences, abnormal functioning of markets and disruption of certain segments of markets. we showed our responsibility in taking monetary policy measures – we call them “ non standard ” decisions, strictly separated from the “ standard ” decisions, and aimed at restoring a better transmission of our monetary policy in these abnormal market conditions. all these “ non standard ” measures – whether exceptional refinancing with full allotment and longer duration, or the interventions in private or public securities markets – have been designed to be commensurate to the tensions observed on these markets and allow a better transmission of our interest rates decisions. in demonstrating both conviction and responsibility, the ecb has been, during the last four years, a reliable and solid anchor of stability to the service of our fellow citizens in the worst economic and financial circumstances since world war ii. had we not been able to present a solid anchor of stability and confidence, the recovery the euro area has experienced since may 2010 would probably have been very different. the increase in gdp of over 2. 5 % in the past 12 months would not have happened. the increase in employment by 350, 000 jobs since then might not have been there. bis central bankers ’ speeches in deciding on all our measures, standard and non - standard, we have the needle in the compass on our primary objective : price stability for the 331 million fellow citizens of the euro area. i wish to underline that achievements of the last 12 years have only been possible thanks to the remarkable dedication and expertise of the ecb executive board and governing council, to whom europe today, through the karspreis, is expressing its gratitude. the same gratitude goes to the 1, 400 staff members at the ecb in frankfurt. they come from all 27 countries of the eu. they are a shining example of professionalism and team spirit, of what it means to work together for europe. current challenges for governance just as the success of the euro as a currency is due to well - designed institutions, addressing emu ’ s difficulties requires a major strengthening of the rules and organisations that govern fiscal