luck and a smooth construction phase. the laying of the foundation stone marks the start of the main construction works for the new headquarters of the european central bank. let me reiterate the different steps so far and take the opportunity to point out some of our main partners in this process so far. the project was initiated by the governing council under the presidency of my honoured colleague wim duisenberg in 1998 – and it is very sad that he cannot be here today. back then, when the ecb had barely been founded, none of us could really imagine just how much time and effort such a project would call for. the decision in favour of the chosen site was taken on the basis of a variety of criteria, such as the size of the site and its location on the banks of river main, as well as the fact that the ostend is a lively and well - functioning district close to the centre of the city of frankfurt. the size of the site – and of the building to come – has been chosen in view to possible extensions of the eurosystem and the european union, the former today encompassing 16 countries and around 330 million citizens, so as to be able to fit all ecb staff in the new premises on the site. i can remember the presentation of all the designs of the international ( urban planning and architectural ) design competition, the great variety of ideas from all over the world of how a european institution and a modern central bank should look like. and how the grossmarkthalle, a remarkable monument, would be integrated and become part of this institution. when deciding on the site in 2001, we aimed at preserving a building that was remarkable in its own time. i would like to thank anp, the consultants who prepared and organised the international architectural competition that generated so many ideas. the international jury, which was chaired by the ecb ’ s vice - president, lucas papademos, was the first body to face the challenge for awarding the prices to the most suitable designs. i would also like to thank the jury for their work and express my appreciation of their endeavours to find the right design for the task and the site at hand. deciding on the building that is required to serve the purposes of a modern central bank is a difficult task. i remember how my colleagues in the governing council and i became deeply involved in details when deciding on the final design at the end of the revision phase. it was only then that the real work for the architect,

and aig provided an example of such critical players ; key custodian banks or large correspondent banks play a similar role. let me add to this, that a particular institution might not only be critical to the functioning of financial markets or market infrastructures because other institutions are financially exposed to it, but also because other market participants rely on the continued provision of its services. for us as policymakers this is a crucial point, as the impact of a failure of a given market player also hinges on the ability of the financial infrastructure to support its resolution and to facilitate the orderly unwinding of positions. so let me now turn to the specific application of network theory to payment and financial systems. 3. network analysis applications to payment and financial systems research in network theory has received relatively little attention in economics until the last decade. therefore, i am delighted to see that this literature is growing and today ’ s workshop clearly illustrates its growing importance. the papers from today ’ s program highlight how direct and indirect interlinkages and contagion dynamics among financial institutions, as well as among institutions, markets and infrastructures, can be significantly influenced by three important network characteristics : first, the degree of connectivity, second, the degree of concentration and third, the size of exposures. we see from the papers that network analysis can help to better understand the interlinkages and systemic connections in many different segments of the financial markets, ranging from money markets to networks of credit default swaps ( cdss ), and from largevalue payment systems to cross - sector exposures in the euro area financial system. we see that this research gives important insights into the various amplification mechanisms in the global web of financial connections. such amplification very much depends on a number of factors, such as the size of aggregate macroeconomic shocks, asset price volatility, liquidity risk and financial leverage. moreover, network analysis can be used to simulate the effect of credit and funding shocks on banking and financial stability by taking into account – beyond the direct balance sheet exposures – also the impact of contingent claims and credit risk transfer techniques. see m. propper et al. ( 2008 ), “ towards a network description of interbank payment flows ”, dnb working paper no. 177, for an analysis of dutch payment flows ; c. puhr and s. w. schmitz ( 2009 ), “ structure and stability in payment networks – a panel data analysis of artis simulations ” in h.