as micro - economic weaknesses and imbalances – in the latter case i am thinking specifically about national banking systems – and recommend appropriate policies to achieve internal stability and external viability. thus, it could serve as a prominent tool for preventing externalities and international crises. of course national authorities have to be prepared to adopt corrective policies in a timely manner – if called for. the future of official international organizations to what extent the efforts of international organizations to produce stability have been successful in the past is open to debate. unfortunately, financial crises have occurred in recent years in several countries. all elements – the setting of codes, rules and procedures, their implementation and monitoring – have to be respected to safeguard international economic and financial stability. some initiatives are already under way in this respect. in general, it seems crucial that the international organizations concentrate – not least under conditions of scarce resources – on their core mandates. as concerns the imf, the surveillance function must play a dominant role on the basis of professional diagnosis and frank and open discussion of therapy. not completely new though is the problem of non - complying countries that refuse corrective policies suggested by the imf and supported by its membership. at some point in time, when non - compliance heightens the risk of a crisis, the imf must go beyond confidential channels of communication with the respective country. while we do not want the imf to become a kind of rating agency, the imf should under appropriate circumstances issue data information to encourage the respective authorities to correct some “ dangerous policies ”. another element of the fund ’ s preventive role is the design and monitoring of data publication standards like the sdds to enhance transparency of the national economic situation and policies as a means to facilitate solid judgements by markets participants that allocate financial flows. i mention the financing role of the imf at this late stage, since it generally comes into play when preventive efforts of all players have not succeeded. it is certainly a more visible and glamorous role, especially in crises situations, than the day to day business of surveillance, but it is a sign of failure of the preventive role. a rising need for imf financing reflects a poor grade for the fund ’ s surveillance efforts. generally speaking, the more successful the surveillance, the less imf financing is required. of course, conditionality under fund supported programs should be subject to the same test to demonstrate its effectiveness. this implies that successful work of the imf should be reflected in

area? “, ecb working paper no. 63, and greiber, c. and neumann, m. j. m. ( 2004 ) „ inflation and core money growth in the euro area “, deutsche bundesbank, discussion paper no. 36. 2 / 4 one dimension of data uncertainty refers to the problem of measuring well - defined economic aggregates. this problem occurs for example if variables cannot be measured precisely and are therefore subject to revisions after they have been published for the first time. the problem of measurement errors in real - time is most severe in case of “ real economy variables ”, where revisions can be very large. the gross domestic product is an important example. due to these real - time measurement problems we are left with a huge amount of uncertainty. and this is not only true for the current state of the economy, but also for our expectations of future developments. forecasts are conditional on real - time data, which may be revised at some later stage. against this background it is crucial to emphasize that monetary and financial data are far less affected by such measurement problems than data from the real economy. monetary data are available very quickly. and they are available with a much smaller measurement error than other key variables. therefore, money may serve as an important indicator of current economic activity. on a microeconomic level, private agents´ real money holdings depend amongst other determinants on their individual real income which is known to them. 7 if agents are able to quickly adapt their money holdings, changes in their real income will quickly translate into changes in their money holding. as a consequence, changes in aggregate real income quickly lead to changes in aggregate money. money, therefore, adequately aggregates the individual information on real income development up to the macroeconomic level. measurement problems become even more severe if certain model variables are unobservable as such. important examples include the output gap and the natural rate of interest. with such variables one is faced with another severe problem : the theoretical construct has to be translated into a statistical concept. and that is exactly the point where the problems of data and model uncertainty are closely connected : an empirical quantification of the output gap, for instance, is often based on more or less detailed assumptions about an underlying model structure. if in turn a policy reaction function depends crucially on such unobservable variables, errors in assessing the size of those variables may lead to large deviations from optimal policy. as empirical studies show, this applies