have little choice but to work with the market by means of a permanent dialogue with its participants. at the other extreme are central banks that both own and operate the payment systems, and who may therefore be tempted to impose a solution on the market. but experience has shown that, even where it is possible to impose a solution, it is not necessarily the most effective approach. accompanying consultation with the market often pays additional dividends. of course, cooperation is a two - way street. the market in turn must realise that commercial considerations, while important, cannot by themselves dictate the nature of necessary reforms. the central bank will usually have certain overriding interests ( such as avoiding systemic risk ) that are likely to be a lower priority for the market itself. so the central bank will typically have to set the objectives of the reform. and ultimately the central bank may have to override the wishes of the market in some areas. but if the experience of the private sector is drawn on wherever possible, the objectives are likely to be met more effectively. this is partly because the market can exert a positive influence on the design of the reforms. a good example of this approach put into action is the strategy adopted by g10 central banks to tackle the issue of foreign exchange settlement risk : after the thorough analysis of the overall situation by the cpss the market has been set the objective of developing appropriate multicurrency services, but how it reaches that objective is largely up to it to determine. and market involvement can do more than help to shape the form of the solution. implementation of the reform is also likely to be much easier if it is on the basis of an agreed solution rather than one that is imposed. such a solution necessarily includes a full agreement of the regulators of the internationally most used currencies. conclusion let me conclude by saying that the overriding importance of reliable, efficient and risk - free large - value transfer systems has been acknowledged worldwide. as a consequence of this situation, in my capacity as chairman of the cpss i have been appointed a member of the financial stability forum. this new institution has been created by the heads of state of the g7 countries. it associates representatives of twenty countries – including financial regulators and central banks – as well as of international organisations like imf, world bank, oecd. also seen from this angle i want to encourage all payment system experts and central bankers in this region to cooperate closely when designing or implementing new payment systems in their countries.

sabine lautenschlager : european monetary and financial union – what is needed in terms of banking supervision? speech by ms sabine lautenschlager deputy president of the deutsche bundesbank, at the symposium on “ central banking – where are we headed? ”, in honor of stefan gerlach ’ s contributions to the institute for monetary and financial stability ( imfs ), organized by the imfs and the house of finance, goethe university, frankfurt am main, 7 february 2013. * 1. * * introduction ladies and gentlemen we come together today to honour professor stefan gerlach ’ s contribution to the institute for monetary and financial stability. stefan has certainly proven time and again to be an outstanding scholar who is able to connect theoretical considerations with the requirements of reality. and reality is what is needed, especially in times of stress like these. ladies and gentlemen, the crisis we are experiencing is without doubt the most extensive and worst economic crisis of recent decades. i would not miss it at all ; but as we have to endure it, we should all look to fulfil the original meaning of the word “ crisis ”, which is “ turning point ”. and to reach this turning point in the positive sense of the term, we need to seize the opportunity and use the lessons learnt to make the financial system and the monetary union more resilient. with regard to the banks as one important part of the financial system, we have made some important progress so far. banks have to comply with higher capital and liquidity standards ; the requirements for adequate internal control systems and an appropriate governance structure have also been tightened substantially. furthermore, the requirements to be met by supervisors have changed significantly, too. the fiscal and economic state of affairs of the emu ’ s member states is improving as well. to achieve further progress at the national level, governments need to adhere to their decisions to increase investor confidence and economic competitiveness with fiscal consolidation and structural reforms. and we have seen some progress regarding the architecture of europe ’ s financial supervisory system – even if one might ask whether it is sufficient with respect to the risks and liabilities increasingly shared at the european level. national governments seem to have no great wish to give up major parts of their sovereignty, with one exception in my view. over recent months, the european governments have agreed on a european banking union or, more specifically, a banking supervisory set - up at european level. the bundesbank welcomes the proposal. it has the