there is no international consensus on the appropriate width of the corridor, a narrow corridor provides clearer guidance for the market and also helps to limit volatility in short - term interest rates. by introducing auction - type instruments, the irc system is intended to ensure more equitable access for all participants. in addition, we hope to ultimately aid in the development and deepening of the country ’ s capital and money markets. over time, as more liquidity is absorbed by the bsp, market participants will be encouraged to be more active and more prudent in managing their own day - to - day and short - term liquidity positions. it is our hope that, in the process, we will encourage counterparties to reduce their reliance on central bank facilities and instead transact more with each other through interbank markets, in order to meet liquidity requirements. the more immediate benefit of the new auction - type instruments under the irc is that the price discovery process will be facilitated by the bids we receive from market participants, which will by june 3, all rrps under the current facility would have matured and all term placements under sda would have been wound down to give way to the new facilities under the irc. bis central bankers ’ speeches provide information for the bsp and for the market on the prevailing cost of and demand for liquidity. in turn, better price discovery will allow the industry to establish more accurate interest rate benchmarks in the future. ladies and gentlemen, let me emphasize that the new irc system is not a departure from the bsp ’ s current monetary policy framework. in fact, the irc system is envisioned to further support the inflation targeting framework by reinforcing the bsp ’ s policy stance as represented by the overnight reverse repurchase rate that will remain our key policy rate. more importantly, the shift to the irc system does not represent a change in the bsp ’ s stance of monetary policy. the irc reforms are primarily operational in nature and will not materially affect prevailing monetary policy settings upon implementation. at the same time, short - term liquidity conditions are expected to remain broadly unchanged, as funds will continue to be absorbed through monetary operations under the new irc system. moreover, the rate adjustments in the bsp ’ s instruments under the irc system remain consistent with the outlook for inflation and growth. our current domestic environment of manageable inflation, a stable financial sector and firm economic growth prospects affords us

, no conceptual changes to the pact are necessary ; instead, all member states need to have the will to comply with the agreed rules. that would not only avoid overtaxing future generations ; it would also make a major contribution to achieving faster growth and more employment. after all, public confidence in the future can be strengthened only by a fiscal policy that is predictable and based on government finances which are sustainable in the long term. by contrast, a lack of confidence in the future gives rise to uncertainty, encourages greater precautionary saving and reduces the propensity to consume. if the emerging upturn is to be sustained, we need fiscal policy consolidation together with clear economic policy guidelines and ambitious structural reforms. by contrast, an anti - cyclical fiscal policy would work, at best, only in the short term and, as a rule, would have little quantitative effect. in the long term the ensuing increase in debt would impede dynamic economic growth. the upshot is that we must restore the confidence of the german public and our european partners in the sustainability of german fiscal policy. this would also make it easier for monetary policy makers to guarantee sustained price stability and low interest rates in the euro area. 2. 4... in the gold reserves ladies and gentlemen that part of the bundesbank ’ s reserve assets that is held in gold has frequently been the object of desire. and so in the present difficult budgetary situation there is no lack of suggestions on how this asset could be used. the bundesbank decides on gold sales in accordance with the gold agreement it concluded with the other g - 10 central banks. the use to which the valuation gains realised from possible gold sales is put is decided by parliament within the framework of the statutory regulations governing the use of the bundesbank ’ s profit. it is only the realised valuation gain that can be distributed. the precise amount depends on the gold price and the dollar exchange rate at the time of the sales ; if the sales option now included in the new gold agreement of the g - 10 central banks were to be exercised in full, a sum of no more than several billion euro would accrue within five years given the present market situation. by way of comparison, we might consider that the federal budget for 2004 amounts to €257. 3 billion, €29. 3 billion of which is financed by means of net new loans. consequently, sound fiscal planning disregards any sizeable financing potential from the gold reserves or any significant