both price stability and financial market stability ; “ leaning against the wind ” : difficult in practice ; however more tools ( blurring boundaries between monetary policy and regulation ) ; price stability = sine qua non for financial stability ( but not sufficient ). 4. conclusion despite criticism, reform progress has been substantial. enough to avoid future crisis? certainly not, but hopefully enough to render crisis less severe. remaining reform workload is huge. changes in the regulatory framework are not technical matters alone implemented by pressing a button by a benevolent social planner. resistance from vested interests and lobbyists endanger success of reform agenda. policy makers need support for their ambitious project of securing future economic stability in europe and elsewhere. bis central bankers ’ speeches a more balanced development path will enable our peoples ( europeans, americans, asians and all other world citizens ) to prosper in a sustainable manner. bis central bankers ’ speeches

story! euro area = stability area : over the last decade, average inflation exactly matched ecb ’ s definition of price stability ( below but close to 2 % ), despite heavy oil shock ; euro = at least as strong a currency as german mark : against usd stronger 1. 18 eur / usd in 1999 ) ; than at time of introduction ( around marginal devaluation of effective exchange rate = relief for our exporters, after years of appreciation. with global crisis the euro has passed its hardest test : bis central bankers ’ speeches elimination of exchange rate volatility – beneficial for small member states : “ in turbulent financial waters it is better to be on a large, solid and steady ship rather than on a small vessel, ” ( ecb president trichet ) ; europe proved its solidarity and ability to act – ( recovery plan, rescue umbrella, reform debate ) ; ecb reacted swiftly and effectively – avoiding a collapse of the whole economy : providing boldly liquidity to banks : no inflationary impact as long as low credit demand ; exit already underway. securities market programme – temporary purchasing of bonds : no state financing – only to calm markets ; temporary, secondary market, very limited amount ; recovery on its way ( but slow and bumpy ) : 2010 : 1. 7 % ; forecasts 2011 : around 1, 6 % ) ; nevertheless national adjustment challenges still exist : structural reforms + fiscal discipline. bis central bankers ’ speeches 3. crisis lessons : a. financial sector stability : macro - prudential perspective : importance of systemic risk, better understanding of interconnectedness in financial system – turbulence can arise from relatively modest initial shocks. central banks role in financial stability : independence and anchor of stability ; austria : important improvements already in 2008 : financial markets authority ( fma ) and the oenb have joint responsibility for micro prudential supervision of banks. gradual progress in the europeanization of financial supervision ( european systemic risk board ) macro - prudential supervision www. oenb. at all financial sectors esrb banks ( eba ) insurance companies ( eiopa ) financial markets ( esma ) esfs / esas ( european system of financial supervisors / european supervisory authorities ) micro - prudential supervision oenb. info @ oenb. at european supervisory architecture. european systemic risk board to identify emerging systemic risk, to publish early warnings as well as to make recommendations to the competent authorities ; micro - prudential supervision : three european supervisory authorities