, which establishes the bounds for the operations of financial institutions. the parliament is responsible for legislation on financial operations, while the supervisory authority issues more detailed instructions. in many countries, including sweden, the experiences of the 1990s have paved the way for a thorough review of the legal structure of the financial sector. in this context, it is worth noting that laws and regulations today to a great extent are developed through international negotiations such as in the basel committee and, for us in europe, the eu. the role of the central bank in this process is the comfortable one of a knowledgeable observer, posing relevant questions in working groups and committees and pointing out inadequacies in suggested solutions. there is much to say about this process, but i shall have to leave it for a different occasion. 2. day - to - day oversight the second strand of financial stability work is the day - to - day oversight. this may be described as resting on three pillars : • the first pillar is the supervision of individual banks, • the second pillar is the surveillance of systemic stability, • and the third pillar is payment system oversight. the first pillar is clearly the responsibility of the supervisors, whether they are a separate fsa or, as in many countries, a department within a central bank. the supervisors collect data from the banks, analyse these data and make on - site inspections. prudential supervision performed by a competent authority must be the basis for all day - to - day oversight. the second pillar is the joint responsibility of the fsa and central bank. the division of responsibility is really one of perspective. while the fsa bases its work on individual institutions, the central bank looks at the banking system as a whole and attempts to assess the risks that could arise in it both in the short and the long run. of course, there is overlap in the tasks of the fsa and the central bank, but it is often fruitful to approach a problem from somewhat different angles. details are important, but looking at details you sometimes miss the overall picture. this, at least, is one conclusion we drew in sweden from the experiences of the 1990s. the third pillar of oversight is the supervision of the financial infrastructure. this is a relatively new task derived from the complicated technical and legal systems that handle all financial transactions today. the infrastructure is of particular importance to the central bank, since we would most probably have to provide emergency liquidity assistance if anything went wrong. the infrastructure is dominated by the systems for

mr noyer covers several topics on the euro : six months after its introduction speech delivered by christian noyer, vice - president of the european central bank, at the institute for international monetary affairs ’ ( iima ) seventh symposium on “ the euro : its promise and challenge to the world economy ” in tokyo on 6 july 1999. first, let me thank the organisers of this conference for inviting me to participate in this panel. indeed, in my view, the title of this symposium, “ the euro : its promise and challenge to the world economy ”, has been well chosen. the introduction of the euro, which was successfully launched just over six months ago, marks a significant milestone in the process of european integration and will bring considerable benefits to the nearly 300 million citizens of the euro area. the introduction of the euro will have a profound impact on the world economy, as well as the euro area itself, in years to come. however, the euro area also faces a number of challenges if the full potential of the single currency is to be realised. the organisers have specifically asked me to cover several topics. therefore, i should like to start my remarks by considering the current economic situation and the outlook for the euro area. i shall then explain the relationship between monetary and fiscal policy in the euro area and deal briefly with the issue of differing economic situations in member states. finally, i should also like to comment briefly on the question of structural reforms. 1. the current economic situation and outlook for the euro area real economy according to a preliminary estimate released by eurostat in mid - june, overall output growth in the euro area stabilised in the first quarter of this year. real gdp in the first quarter was up 0. 4 % on the previous quarter, following a gradual slowdown from 0. 7 % to 0. 3 % during the course of 1998. even though caution should be exercised when interpreting these figures, since they combine data compiled partly in accordance with the old methodology and partly with the new ( esa 95 ), two broad conclusions may be drawn : 1. while previous data had suggested a rather sharp slowdown in the last quarter of 1998, the revised data imply a pattern of slowing real gdp growth which was spread more evenly over the course of 1998. 2. the weakening of output growth came to a halt during the first quarter of 1999. data for industrial production for april 1999 confirm this picture. although there is not yet a clear sign of a recovery in the industrial sector,