susan s bies : lessons to be re - learned from recent breakdowns in corporate accounting remarks by ms susan s bies, member of the board of governors of the us federal reserve system, before the institute of international bankers, new york, 10 june 2002. * * * good afternoon. thank you for the invitation to speak today with members of the institute of international bankers. my remarks will not be in the traditional “ what have we learned from... ” format, but rather the more realistic what we should re - learn from enron and other recent, well - publicized breakdowns in accounting, auditing, and corporate governance. as a regulator dealing with these types of issues, i find i draw on my experience in bank financial management and accounting. i also want to continue to meet groups like yours so that i can stay aware of current issues facing bank managers. i am going to touch on three broad areas in addressing issues arising from recent breakdowns in corporate accounting : the current state of accounting and auditing in the united states, the role that bankers should play as users of financial information, and good corporate governance practices that bankers should apply within their own organizations. let me be clear about my premise. the root causes of the breakdowns in corporate financial reporting that have been widely disclosed in the past few months are ineffective corporate governance, financial reporting, and risk management practices. the lessons we can re - learn from recent events should not be news to anyone. rather, recent events should serve as a wake up call to corporate boards, management, and auditors to follow through on their fundamental and traditional professional and ethical standards of conduct and control processes. the issues are not new, but the scope and frequency of breakdowns are of concern. as news reports and congressional testimony on various aspects of these breakdowns occur, corporations and auditors should address the issues raised so that they do not compromise the reputation of their organizations. accounting practices in complex organizations first, let me address the state of accounting and audit practices. mergers and business innovations have increased the scale and scope of large organizations. further, significant developments in financial theory and technology have led to the development of financial instruments that facilitate the separation and reallocation of risks to parties more willing and able to bear them. a byproduct of these developments is that it has become ever more difficult for outsiders to understand the financial positions of complex organizations. the current framework of financial reporting in the united states effectively represents the performance of most corporations

council once the necessary regulatory framework has been completed. the digital euro is an important project, not only to promote competition and innovation in the european payments system with lower costs for users, but also to preserve the euro area's strategic autonomy and monetary sovereignty. in order for it to be successful, it will be necessary to design incentives that encourage all stakeholders to join in : consumers and firms, because they will be using the digital euro, and banks and other institutions, because they will be distributing the new money and providing the associated services. the digital euro should be used as a payment instrument and not for saving purposes. we must therefore first consider the risks for monetary policy transmission and financial stability that could arise from substituting an excessive amount of bank deposits with digital currency. as a central bank liability, the digital euro will be a risk - free form of money like notes and coins, to be used alongside cash and other payment instruments already in use but without necessarily replacing them. the solutions under consideration include in particular the absence of any remuneration and a threshold for the amount of digital currency that a user can hold. the solutions will have to preserve banks'capacity to provide credit to the economy and, at the same time, avoid the possible uptake of high - risk instruments, such as some types of crypto - assets, as a means of payment. supporting the climate transition 8 / 11 bis - central bankers'speeches today the banking system is facing the challenge of the green transition. while in the medium term, the contribution of the financial system will be fundamental in achieving the decarbonization goals agreed at global level, it should be prepared, as of now, to manage climate and environmental risks. the recent flooding in romagna and the surrounding territory reminded us how extreme weather events can not only cost human lives, destroy homes and disrupt the lives of people in the affected areas, but they can also have serious consequences for businesses and, hence, for the banks that provided them with funds. the areas in question generate around 3 per cent of the value added of the national non - financial private sector and a similar share of total bank loans. more generally, the bank of italy's estimates show that, in italy, around one fourth of loans to non - financial firms are aimed at businesses in provinces at high risk of natural disasters. of these, 58 per cent are covered by guarantees, which could, however, be exposed to the same risk as the loans ; the coverage ratio falls to