. the transformation process in the former socialist countries has made us aware of just how important institutional frameworks are. we have now become more aware again of the importance of thinking about statutory frameworks, not least in the financial world. the academic debate about the correct strategy for monetary policy goes on and on. with the creation of the ecb the debate has actually become livelier again. i could cite many more examples to show that, even today, there is no automatic means of ensuring stable money and stable markets. it is an ongoing task. in the words of goethe : “ what you have inherited from your fathers / earn over again for yourselves, in order to possess it. ” in this sense it is the task of the monetary stability foundation to encourage research in this area. and, what is more, on a broad basis. the funds which are already available for this purpose come from the issue of a dm 1 gold coin by the bundesbank. indeed, last summer we experienced an unusually heavy demand for this gold coin. part of the net proceeds, dm 100 million ( or € 51 million ), forms the foundation's capital base. this link to the d - mark once again underlines quite clearly how much the foundation is bound to monetary stability. by far the greatest part of the foundation's funds will be used to finance a research unit, which is to be linked to a university. this research is to be of an interdisciplinary nature. monetary stability is to be studied from the point of view of economics, finance and law. it is our desire that this centre will pursue new avenues of academic study and policy consultation. interested institutions are currently being asked to apply. eighteen universities have expressed interest in the first round. however, it will take some time yet before the process can be finalised. a small part of the foundation's income will be used in future to finance scholarships and conferences. and that brings me back to the point of our being here today : the inaugural conference of the new foundation. it is also my cue to hand you over to professor hermann remsperger, chairman of the supervisory board of the monetary stability foundation. he will make a start to the conference, which i now declare open. i hope that all of you enjoy two interesting and informative days in frankfurt. thank you very much.

exception of the united kingdom – is still predominantly bank - based, the us tradition is much more market - based. economists have debated which system is superior for decades, if not for centuries. 1 this is neither the time nor the place to repeat the whole debate about advantages and disadvantages of the respective systems. allow me, however, just to name some significant points of the discussion. there is empirical evidence to suggest that market - based systems react more procyclically than bank - based economies because of more pronounced asset levine, r ( 2002 ) : bank - based or market - based financial systems : which is better? in : journal of financial intermediation 11 ( 4 ), pp 398 – 428. bis central bankers ’ speeches price booms and busts. 2 however, bank - based systems are also beset by procyclicality. a study conducted by the bank for international settlements has shown that, while bank - based systems are more effective at smoothing the impact of business cycle fluctuations, marketbased economies recover more quickly after crises. 3 leaving aside the pros and cons of the two systems, it is my strong belief that the question of the proper financing source cannot be answered with “ either / or ” but has to be “ both ”. in the end, it comes down to the uncontested argument of diversification. and the answer is highly dependent on the context. in europe for instance, the bank - based system reflects the corporate structure of the economy – there are many small and medium - sized entities, the so called smes. and – like in the united states – the smes tend to favour bank - based financing, if only as necessity because there are barriers for small companies to obtain market financing. against this backdrop, i very much appreciate the european commission ’ s efforts to establish a european capital markets union. by making it easier for small and medium - sized enterprises to access the capital markets, we could open up a further source of funding for them. to make one point clear : referring to what i said before about “ either / or ”, the objective of the european capital markets union is not to abandon bank - based funding but to supplement it with capital markets - based funding. and in europe of all places there is plenty of scope to do so. the european stock market is only 60 % of the size of the us stock market as measured in relation to gdp. similarly, the european market for venture capital is