was set up in a “ partnership ” with the financial sector. the financial system helped to shape supervision as we know it. in other words, the currently much - acclaimed dutch polder model concerns not just the cooperation between government and social partners, but in a sense also the supervision exercised on the financial sector, with all parties involved acknowledging that proper supervision serves a common purpose. obviously institutions have commercial goals, but they are also aware that the public ’ s confidence in the financial system is conditional upon sound supervision. an open relationship has consequently grown up between the bank and the institutions subject to its supervision. yet the bank maintains a sufficient distance vis - avis the institutions, to safeguard objectivity and the authority to act when and where necessary. it is this mix of cooperation, efficacy and forceful action which makes the supervision exercised by the bank so potent. i would like to point out that a partnership does not equal self - regulation where the supervision of the financial sector is concerned. the experience gained by the financial sector with self - regulation has not always been positive. though widely sustained by the sector, financial supervision also clearly stands above it. as the civil society will not be able to function properly without impartial supervisory bodies, it will need to delegate part of its competencies and responsibilities to them. conclusion i am nearing the end of my address. i am all for striving for a civil society in europe. it means, however, that we need to analyse the obstacles that we find on our way to that goal. the model of the civil society is up against several constraints. first, the externalities of the behaviour evinced by those taking part in the civil society. second, possible reprehensible behaviour by individuals - to the detriment of others. third, the tendency to lose sight of the interests of weaker groups in society. i have attempted to show that the limitations that the civil society is up against also constrain the financial sector ; there the remedy has been found in the establishment of a supervisory authority which sets standards and ensures compliance. ideally, financial supervision is a partnership between the supervisory authority and the financial sector. at the same time, the supervisor should stand above the sector, and be capable of intervening forcefully and effectively. what does all this mean for the civil society? though the constraints on the civil society can be remedied in part by society itself, some form of supervision is ultimately indispensable. the best illustration i can think

should a bank fail, something that cannot be wholly precluded by supervision, the supervisory authorities can resort to other ways and means to keep it going. in the early - 1990s, the swedish government made vast amounts of funds available to the swedish banking system when a major financial crisis threatened to paralyse the entire financial sector there. if and when a central bank will actually act as lender of last resort is known only to that central bank. this is to prevent banks from engaging in “ moral hazard ” behaviour. if banks knew under what conditions liquidity support is given to the banking system, they might anticipate such action, rather than shoulder their own responsibility for the continuity of their business. this brings us back to the civil society. even though there may be an authority which supervises the functioning of the financial sector, at the end of the day it is up to banks themselves to bear responsibility at the very least for their own continuity. supervisors do not act for bankers. in other words, rules and standards - and the establishment of an agency which ensures compliance - may help to internalise externalities in the civil society ; ultimately, the participants of the civil society must shoulder their own responsibilities. key elements of the civil society : reprehensible behaviour the second constraint on the civil society is reprehensible behaviour on the part of individual participants in respect of certain standards and values. those who advocate a civil society assume that everyone is more or less concerned with the common good. everyone operates on the common ground between self - interest and the greater good. there are, however, always people who have only their own best interests at heart, and who have no qualms about sacrificing others in the process. this is considered reprehensible behaviour. in this sphere, too, there is a need for an agency to demarcate the boundaries between acceptable and unacceptable behaviour, as well as to ensure that these boundaries are not transgressed. reprehensible behaviour is completely out of the question in the financial sector. individuals entrust their money to financial institutions. abuse of that trust will damage the reputation of the bank in question, and with it possibly its continuity. that is why financial supervisors are paying increasing attention to the integrity of financial institutions. this brings us to an area of great activity. in the past, supervisors focussed notably on the prudential aspects of banks ’ operations. over the years, however, their attention has shifted to the