for their entire payroll. but a problem is that insurers do not provide occupational disability insurance for employees over 65. so it is up to employers to carry the risk of occupational disability for these employees. moreover, the risk of an employee becoming sick increases as he gets older. since the sickness benefits act obliges employers to continue paying sick employees for two years, this could be very costly for employers. the statutory retirement age thus constitutes an obstacle for older workers and their employers, even though prolonging working lives would be of general benefit. germany has opted for gradually raising the retirement age from 65 to 67 as of 2012. during the first twelve years, germany will raise the retirement age by one month a year, and in the six following years by two months a year, completing the process by 2030. so german employees will have the opportunity to prepare for a later retirement age, and no one will have to carry on working unexpectedly. we could likewise raise the retirement age in the netherlands stepby - step to, say, 67 too. this would make it easier and more rewarding to stay on in the workplace. but it is vital to encourage older workers to continue working, even before the retirement age of 65. because too many people are now taking early retirement without being prompted by the physically - taxing nature of their job. with this in mind, the government has already voiced its desire to partly fund the state old age pension by taxing older people ’ s incomes. in itself, the idea of funding state pensions from public resources seems a good idea : older people would then help carry the collective burden of population ageing. all other things being equal, it would allow for a reduction in general tax rates, and it is also expected to boost total labour participation. moreover, the funding of state pensions from public resources forms a direct according to eurostat figures, average labour participation among people aged 55 - 64 in 2006 was 50. 5 %, whereas it was 77. 1 % for those aged 15 - 65. incentive to older workers to keep working. however, the impact of this inducement will be contained, because the change in funding will mainly affect the more well - off pensioners. research by de nederlandsche bank 7 has shown that when it comes to choosing their own retirement date, this group is less sensitive to changes in their pension wealth. besides the said income effect, the move to finance state pensions from public resources also has a substitution effect : the positive

bankers? in recent years, we have focused more heavily on good corporate governance, and expanded our supervisory scope to include business models, behavior and culture. by looking closely at business models, we want to increase our understanding of how banks actually make money and become better able to discern high - risk strategies. in our supervision of behavior and culture, we aim to make banks ’ senior management more capable and more careful decision - makers. let me give you two examples. first, our “ fit and proper ” tests for aspiring board members have become more thorough. we have added requirements such as : • being sensitive to external developments ; • being able to take balanced decisions ; • and taking responsibility for the outcomes. we have done so as we want banks to have more competent decision - makers on their boards. second, our supervision of governance now also covers board effectiveness. we measure this aspect by observing the behaviour of board members during meetings. we analyze their performance, and reflect on the way they operate, asking challenging questions like : • is the chairman too dominant? • is the board really “ in control ”? • how does the board communicate? and • is there room for differing points of view? • through these new developments, we aim to foster prudent decision - making and stimulate reflection. ladies and gentlemen, i ’ m going to summarize the main points of my speech. i ’ ve approached the theme of this gathering, “ ethics and the crisis in the financial sector ”, from my perspective as executive director responsible for prudential supervision. i ’ ve made a case for how banks can restore confidence as an essential building block for a healthy economy. the remedy for the current confidence crisis neither lies in bashing bankers, nor in a charm offensive, nor in establishing ethics offices, nor even in imposing more rules. bankers need to become prudent decision - makers again. this will restore the balance required for them to function optimally. bis central bankers ’ speeches this is how i look at the issue. i ’ m aware that others may hold different views and will be happy to answer questions during the panel session. finally, i wish all students and faculty members gathered here good luck in their new academic year and hope to see some of you back at de nederlandsche bank one day, when your career takes you where maybe you hadn ’ t expected to go. ; ) thank you. bis central bankers ’ speeches