yves mersch : the changing role of central banking speech by mr yves mersch, member of the executive board of the european central bank, at the lamfalussy lectures conference of the lamfalussy award at magyar nemzeti bank ( the central bank of hungary ), budapest, 4 february 2019. * * * john von neumann, the hungarian - born mathematician, once said : “ there ’ s no sense in being precise when you don ’ t even know what you ’ re talking about ”. i saw alexandre lamfalussy in many different roles over the course of 30 years, and i always admired his capacity to be extremely precise because he was professionally knowledgeable. it is therefore a great honour for me to be awarded a prize in memory of a man who made such an important contribution to european integration. during many years representing my country of origin in the belgian constituency at the imf, i witnessed the intellectual strengths of the hungarian representatives, especially from the central bank. i therefore feel particularly flattered to have been awarded this prize by the magyar nemzeti bank and its president, mr matolcsy. i also want to express my thanks to governor ewald nowotny of the oesterreichische nationalbank, who is also a firm believer in the need to bring the people of our continent together without nations trying to dominate each other. indeed, i feel very humble and modest in this environment. i was lucky to be able to develop my views and opinions when accompanying my highest political authorities in their meetings for more than 20 years. moreover, my family provided me with two solid foundations : resistance to illiberalism during world war ii, and the respect of the rule of law. i have been veering between what benoit mandelbrot called “ the two poles of human experience ”, one driven by my legal background and the deterministic system of order and planning, and the other inspired by my lifelong experience with finance and the stochastic or random systems of irregularity and unpredictability. trying to straddle the two poles with insights from political science brings me to today ’ s theme : the changing role of central banks. mandelbrot said of the great financial crisis : “ financial economics, as a discipline, is where chemistry was in the sixteenth century : a messy compendium of proven know - how, misty folkwisdom, unexamined assumptions and grandiose speculation.

- to - be - completed single deposit guarantee scheme. according to an empowering clause included in the maastricht treaty activated by unanimity, the ecb received specific supervisory powers, albeit only for credit institutions. this transfer of sovereignty is still being challenged in the german constitutional court. it came hot on the heels of a first move towards greater coordination in the financial sector through the establishment of european agencies for bank, insurance and securities and markets, in which alexander lamfalussy played an important role. indeed, the governance structure of these agencies was modelled on the so - called level 3 committees introduced by the lamfalussy committee of wise men. during these times, another trend became noticeable : the transfer of an increasing amount of new tasks to national central banks. some of these had traditionally been performed by the central banks, but others were totally new. as the ecb has to issue an opinion on every change to laws governing national central banks, a conceptual framework evolved which establishes which tasks are governmental tasks, and which tasks are traditional central bank tasks, or which tasks could be considered ancillary to them. an undue transfer of competences to a central bank of tasks that belong to governments could indeed be seen as circumventing the monetary financing prohibition or threatening its financial or resource independence. ncb consent and the funding of such new activities would therefore need to be scrutinised. the case law of our adopted opinions over recent years in many countries covers topics as diverse as buying paintings, financing culture, education or investments and the financing of resolution funds. we also gave opinions on establishing a central register of bank account numbers ; exercising asset management functions ; insurance premiums ; protection of competition in the mortgage loan market, to name but a few. however, the biggest change in terms of conceptual evolution, strategic thinking and interaction with different policy fields concerns financial stability and macroprudential policy. under monetary policy, the treaty foresees that the ecb shall contribute to the policies of competent authorities relating to banking supervision and the stability of the financial system. the statute lists this as one of the tasks of the ecb. the concept of a financial cycle, as distinct from the business cycle, was only developed much later with the increasing financialisation of our economies. 3 the emergence of this reality of a financial cycle and its relation to central banking was acknowledged with the establishment of the european systemic risk board ( esrb ) at the ecb and supervisory tasks being conferred