required to counter inflation – when inflationary pressures actually emerge – would be more forceful. see a. blinder and r. reis, “ understanding the greenspan standard ”, paper presented at the federal reserve bank of kansas city symposium “ the greenspan era : lessons for the future ”, jackson hole, wyoming, august 25 - 27 2005. wealth of cumulative evidence accruing – from month to month – from the economic and the monetary side. in both cases, the medium - term orientation of its monitoring activity has been preserved. two examples : as regards our economic analysis, when looking at the underlying trend of growth of the european economy, we judged in the second half of last year that we were experiencing a recovery with the trend progressively approaching potential. we judged that the short - term volatility observed in important indicators, including the quarterly growth figure for the fourth quarter of 2005, did not call into question the medium - term growth prospects and therefore the associated gradual increase of risks to price stability. another example can be extracted from our monetary analysis : consistent indications that broad money growth was increasingly due to its most liquid components has contributed in recent months to a gradual tilt of the balance of risks perceived to be signalled by our monetary analysis. it was not the behaviour of aggregate m3 per se which altered the outlook for price stability. it was the realisation that the structural force at work behind persistently abundant liquidity was becoming increasingly connected with final spending and pricing decisions. as i said at the start, the complexity of the analysis required to predict our moves has not materially impeded market participants in responding meaningfully to incoming data. the understanding of our strategy and the information coming from the real economy, as well as from the sphere of monetary aggregates, have shaped market expectations beyond the very near term. i attribute this satisfactory result to our policy framework, which features a primary, sharply - defined objective and a systematic reaction to events whenever the objective is perceived to be at risk. concluding remarks i am sometimes asked the following question : “ you are in the process of increasing rates. is your judgement that your rates today are significantly lower than they should be? what then is the level of the “ neutral rate ” that you would judge it appropriate to reach ( as rapidly as possible )? ” my response to such questions would be the following. first, we are not in a position that we would judge “ abnormal ”, in the sense that we would have to increase as rapidly as possible

office activities, in the process of reserve management. no transaction can take place without the back office. it provides a vital service to the front office by ensuring that all funds flow in a timely and correct manner and all the necessary documentation is completed. inaccurate or untimely trade capture can have implications for the p & l and risk management process. if the central bank does not capture the correct transaction, then position and reported credit exposure might be incorrect. having in mind the importance of the back office service to the reserve management process, one of the goals of the workshop will be to provide best practices in the area of settlements, then different services provided by the bis central bankers ’ speeches custodians, and the importance of appropriate it tools to perform secured and efficient settlements. all the aspects cover over this week will enable to improve and make more efficient and controlled environment for the conduct of the reserve management transactions. in this regard, although back office activities should be separated from front and middle office activities, it does not mean that operations should be considered as separate from the business. on the contrary, the closer operations management is the pulse of the business, and the better communication channels between all the areas in reserve management function, the more responsive operations to changes in the business. ultimately, the overall reserve management process will be better controlled. to conclude, i wish all of you a fruitful and efficient participation in the workshop, with hopes that you will have incentive to take out the maximum from all the issues to be discussed with the distinguished lecturers from the world bank, as well as between each other during the exercises. have a nice week during this workshop, in skopje. thank you. bis central bankers ’ speeches