gertrude tumpel - gugerell : central banks, liquidity and a changing financial market infrastructure speech by ms gertrude tumpel - gugerell, member of the executive board of the european central bank, at the joint bank of france / european central bank conference on “ liquidity in interdependent transfer systems ”, paris, 9 - 10 june 2008. * 1. * * introduction ladies and gentlemen, i am very pleased to welcome you to this conference and i am grateful that i can do so also in the name of the banque de france. last week we celebrated the 10th anniversary of the ecb and the eurosystem. building on the expertise and reputation of the national central banks of the euro area, the ecb has developed well and we are very proud that the eurosystem as a team has delivered what we were supposed to : we have achieved our main objective of price stability in the euro area and – more closely linked to this conference – the smooth operation of payment systems. given the fast pace of financial markets today, i often feel that the ecb has been around for ages. when i look around this beautiful galerie doree, however, i feel that the ecb is still a very young institution. what i find reassuring is the fact that the euro represents a tangible, perhaps the most tangible, realisation of something that is even older than our conference venue : the idea of europe. please allow me to quote jean monnet : “ lorsqu ’ une idee correspond a la necessite de l ’ epoque, elle cesse d ’ appartenir aux hommes qui l ’ ont inventee et elle est plus forte que ceux qui en ont la charge. ” ( when an idea meets the needs of the time, it ceases to belong to its creators and becomes more powerful than those responsible for it. ) the well - being of europe is closely linked to its economic prosperity. economic well - being, in turn, depends crucially on a functioning financial system. i would like to take the opportunity of opening this conference to reflect on the more long - term trends in the financial sector with a special focus on liquidity in the context of market infrastructures. i will derive challenges from these trends that i think are particularly relevant for transfer systems. finally, i will point out where i see the necessary and adequate responses of the private and public sector to these challenges, in particular the eurosystem

general economic policies of the european community. question : in your meeting today, could you describe what the mood was of the meeting and whether there was much debate about your move and much debate about the level of the move and also, whether it was an unanimous vote in the end. duisenberg : the mood was good. we had a very long and, i must say, very interesting discussion today. there were a few who were not very inclined to do something about the rate - but here i talk about a very few - and a very large majority was inclined to do something and supported the proposal as we put it before the council. and so, we had a very good discussion. for the final decision, i am afraid i have to tell you that we did not take a vote. but we know all the different views and so, finally, i could conclude as follows : the governing council decides that the main refinancing rate will be lowered from 3 % to 2. 5 %. question : you said there were no monetary risks of inflation at the moment. can we infer from today ’ s decision that there were monetary risks of deflation or is it purely a growth - oriented decision that you have taken today? duisenberg : no, we also see no risks of deflation emerging. we see that inflation has now remained, on a euro area - wide basis, constant at a rate of 0. 8 % four months in a row up to now. we see some risks on the upside, i. e. mainly the impact of rising energy prices, but that is by definition, as it was when it was on the downside, a temporary factor. we see some risks deriving from some wage settlements here and there in europe, those are the upside risks. we see some downside risks from a rather subdued outlook for general economic development in the entire euro area. but as such, the main thing is that we do not see the situation of price stability in which we entered the euro area, and which prevails until this moment, would be in any way endangered in the future. that gave us the leeway to take the measure i have just announced. question ( translation ) : mr. president, would you say you have admitted today that you are pursuing a business cycle - oriented monetary policy, which would constitute a change in model, compared with the deutsche bundesbank, which has always maintained that it does not pursue a business cycleoriented