these topics. the large number of distinguished speakers ( also at today ’ s conference ), the large number of interested participants and the wide press coverage tell me that i do not need to elaborate further on the relevance of these issues for european monetary policy. i would, rather, like to stress another facet : eight annual ecb watcher conferences also mean eight consecutive appearances of otmar issing at this event. therefore, i would like to take a closer look at otmar's role in these conferences. otmar issing ’ s role from the very beginning, the history of the ecb watcher conference has been inextricably linked to otmar issing. firstly, because i organised the first conference in 1999 in close cooperation with him. secondly, because he has participated in every conference since it was established, providing explanations, comments, replies, opening or concluding remarks. a pretty good track record! throughout all the years as the ecb ’ s chief economist, otmar issing has always stressed the importance of communication and transparency for an effective monetary policy. his annual participation in the watcher conferences shows just how rigorously he personally sticks to these two principles. his unbroken participation is a concrete example of central bank transparency and communication policy in action. it also reflects otmar issing ’ s general open - mindedness towards sceptics and outright critics alike. as an example, let me briefly recall the controversial issue about whether or not the eurosystem should use its two - pillar - strategy for conducting monetary policy, or, more generally speaking, whether or not monetary aggregates should play a prominent role in monetary policy, a question of ongoing relevance. in this context, substantial criticism has been voiced in recent years – not least during previous watcher conferences. nevertheless, otmar issing always chose to face his critics directly at such events in order to patiently and repeatedly explain the whys and wherefores underpinning the eurosystem ’ s current monetary policy strategy. let me conclude my short review with the following, rather personal thoughts regarding otmar issing ’ s legacy. at each of the previous watcher conferences, i was impressed by otmar ’ s mild - mannered, calm style coupled with his resolute attitude. otmar made it a habit to deal personally with each challenge. this commitment and tenacity is probably why he has enjoyed such an outstanding career as one of the few economists who have been exceptionally successful as an academic,

still. basel iii and the capital requirements directive, or crr, are even more detailed, heavier on formulas, and more complex. why is there this trend towards ever more complex rules? five reasons stand out in particular. bis central bankers ’ speeches first : regulation has needed to keep pace – and still needs to keep pace – with ever more complex banking business. second : we are increasingly dealing with what is known as risk regulation. here, historical data and statistical procedures are used to calculate the probability of dangerous events occurring – the rules and regulations then stipulate how banks must prepare for such scenarios. third : global harmonisation brought about by the basel standards. these standards were created mainly for large international banks, but are being applied to all institutions in germany and the european union. fourth : complexity is also caused by european regulation, which imposes an additional set of rules that need to be followed. furthermore, the relationship between european and national rules is often unclear. and last, but not least, complicated rules are also an outcome of compromises. compromises are a necessary element of regulation – especially where a large number of countries with a wide variety of banking landscapes are involved. moreover, the changes proposed by banks and saving banks often haven ’ t exactly made the rules any simpler. this has made compliance with the rules an increasingly costly, time - consuming and unwieldy undertaking. such a complicated set of rules is all but bound to lead to a considerable increase in the costs of compliance. if such rules had been imposed on inspector schimanski and his ilk, tatort would have been a much less exciting show. i personally wouldn ’ t be thrilled to spend 90 minutes watching the inspector poring over implementing regulations. that ’ s only something for masochists, and gotz george, the actor who played inspector schimanski, certainly wasn ’ t one of those. 3. disadvantages : high compliance costs as i mentioned at the outset, the suspect ’ s motive to cause harm to banks and their customers via complicated rules isn ’ t very plausible. and the supposed sequence of events isn ’ t exactly water tight either. but one thing we do have to admit is that the complexity of banking regulation has made compliance very expensive for institutions – in two respects. first, the regulatory requirements generate work for the institution ’ s executives and employees. this includes one - off costs, such as the costs of procuring new software. but it ’ s also about