, “ the financial trilemma ”, economic letters, 111 ( 2011 ), pp. 57 – 59. bis central bankers ’ speeches what are the strengths? despite the depth of the crisis, the exceptional “ flow and stock adjustments ” under way, and ongoing financial market tensions, there are still some strong components supporting the building of the new euro area framework and holding things together. the first strength is the resilience of the single market, which has steadily transformed the now deeply interconnected euro area economies. companies and banks have a european perspective and reach. we are each other ’ s stakeholders. economic integration is a diffuse process. it is the true engine of european integration and is generating largely benign effects. the single market represents the intrinsic value of the euro area. it is a common good. it is an asset shared by all its citizens – a fact which is not given enough recognition as a stabiliser during these difficult times. the second strength lies in the solidity of our financial infrastructures : they have withstood the full force of the crisis. the trans - european automated real - time gross settlement express transfer ( target2 ), has enabled money market access throughout the crisis and for all countries : the cumulated imbalances are now steadily receding. in 1998 there were 18 large - value payment systems : that number fell to six in 1999 and now there are two, which means that both efficiency and financial stability have been enhanced. central clearing counterparties ( ccps ) for securities and derivatives declined from 13 in 1999 to nine in 2012. this entails greater efficiency gains by pooling activities. and more is coming. in 2008, the single euro payments area started to take effect due to time - lags. and the securities settlement systems will change radically once target2 - securities becomes operational. this project is fully on track. the third strength lies in the widespread acceptance of the need for adjustments and reforms in all dimensions of the crisis. the political authorities have taken action. they are already overhauling the political economy of the euro area, and establishing new governance to restore fiscal sustainability and prevent and correct macroeconomic imbalances. the stability and growth pact has been tightened up by the so - called “ six - pack ” of economic governance measures, including the macroeconomic imbalance procedure ( mip ), and they in turn have been complemented by the “ two - pack ”. moreover, euro area countries are summoning up the courage to change – although

role when the euro was introduced, are again forced to play a key role in getting the financial sector ready for the millennium date change. responsibility for the overall coordination of the exchange of information and ideas on this problem among the various sectors of industry, though, is in the hands the federal government. ( to this end, the federal ministry of economics has set up, among other things, a year 2000 expert group in its ministry, in which representatives of the most important sectors of industry and administration affected by the problem are actively participating. ) iii what measures are german banking supervisors taking to help the financial sector achieve a successful crossover to the new millennium? german banking supervisors do not and cannot even dare to guarantee that banks will be fully compliant ; rather the emphasis is on ensuring that • banks ’ senior management have focused on the scale of the problems facing their institution, • they are taking responsibility for solving them, • the banks systematically plan the relevant projects and implement them in a timely manner, and • they have contingency plans in place to rectify any slippage or system failure. since the beginning of their year 2000 activities in 1994 - 95, and particularly since 1997, the bundesbank and the federal banking supervisory office have been leaning on the banking industry to press ahead with its year 2000 preparations with great intensity. therefore the state of the banking industry ’ s preparations for the year 2000 is also a major focal point of ongoing banking supervision. on - site validation procedures through independent auditors during audits of the banks ’ annual accounts for as early as the year 1997 constitute one important point. another very important action is a year 2000 survey conducted in june 1998. the federal banking supervisory office and the bundesbank asked all the approximately 3, 600 credit institutions under supervision and 200 stockbrokers in germany about their year 2000 preparations. the analysis of the preparations is supplemented by personal discussions of banking supervisors with individual credit institutions, particularly those having branches and subsidiaries abroad. immediate actions are taken where the existence of the institution is in jeopardy owing to insufficient preparations for the year 2000. with regard to the timetable, german banking supervisors have not set any official target dates, yet they have made it perfectly clear in discussions and surveys that the external testing of these systems should be completed by mid - 1999. this target date will also be used for the final prudential assessment of the state of preparations of individual credit institutions. although legal problems, particularly liability issues, are being given increased attention in connection with the year 2000