. at the time of corrigan's essay - - the early 1980s - - the statutory authority for that separation was largely contained in two laws : the glasssteagall act, which separated commercial banking from certain investment and securities activities, and the bank holding company act ( with amendments ), which narrowly limited the activities of corporations that were allowed to own banks. when it passed in 1956, the bank holding company act was thought to have been in response to one company's aggressive expansion into banking activities. that company, transamerica insurance, had expanded into several western states and concerns were raised about the resulting concentration of financial resources. therefore, the ensuing body of law on the commerce and banking issue concentrated significantly on separating, or was inspired by desire to separate, banking from securities or banking from insurance. from the time of corrigan's essay until passage of gramm - leach - bliley, the banking industry had expanded substantially into both the securities and insurance agency fields, though significant restrictions still remained. much of the industry's expanded securities authority was gained through the federal reserve's approval of securities underwriting for banks, under section 20 of the glass - steagall act. under the federal reserve's rule, a bank subsidiary was " not engaged principally " in securities underwriting if at first 5 percent, then 10 percent, and ultimately 25 percent of its revenue came from underwriting. this expanded authority allowed many banking organizations, though almost exclusively large banks, to significantly expand their domestic securities activities. these same powers were extended to foreign banks operating in the united states. in insurance, gains for the banking industry were largely the result of court determinations that annuities could be underwritten and sold by banks. court determinations also expanded national banks'ability to market insurance products. consequently, banks of all sizes have expanded their involvement in insurance and annuity activities. by 1999, banks and bank holding companies had gained significant additional product authority in securities and insurance, areas that had been perceived to be on the other side of the banking and commerce wall at the time corrigan wrote his essay. a number of factors persuaded congress that federal action was appropriate, and the gramm - leach - bliley act was passed. congress had learned from the securities and insurance experiences of foreign banks, both the high points and the low points. on the one hand, institutions in some european countries had successfully broadened their securities and insurance activities. on the other hand, there were

axel a weber : the role of money in the monetary policy of the eurosystem remarks by mr axel a weber, president of the deutsche bundesbank, at the panel discussion : ecb monetary policy : the first seven years, at an ecb colloquium held in honour of otmar issing : monetary policy : a journey from theory to practice, frankfurt, 16 march 2006. * * * it is a great pleasure for me to participate in this colloquium to honour the work of otmar issing. my brief remarks will focus on the role of money in the monetary policy framework of the eurosystem. the appropriate role of money in monetary policy is a question to which otmar has made an invaluable contribution not only during his tenure at the ecb but throughout his whole professional career : • as an academic since 1960 • as a member of the german council of economic experts 1988 - 1990 • as a member of the board of deutsche bundesbank and its chief economist 1990 - 1998 • and as board member and chief economist of the ecb since 1998 as president of the deutsche bundesbank i would like to take this unique opportunity to pay my tribute to otmar - both in a personal capacity and on behalf of the institution. the role of money in the design of monetary policy in the euro area has been one of the more criticised aspects in our monetary policy strategy. from a theoretical point of view, the new – keynesian approach, which forms the current paradigm in monetary economics, by and large doubts the relevance of money to monetary policy making in an environment in which central banks predominantly use a short - term interest rate to achieve their goals. in addition, though from a theoretical less radical point of view, market participants often criticise that the contribution of the monetary analysis to the decision - making process of the governing council is not as obvious as it should be. i will argue in my following remarks that both criticisms are unjustified in view of the challenging task of conducting monetary policy in real time in an uncertain environment. first of all, there is a general consensus that “ inflation is a monetary phenomenon ” – as milton friedman put it ; a central bank that aims at price stability therefore simply cannot afford to completely discard monetary indicators ; and what i learn from more recent deliberations of central banks that traditionally have a more critical attitude towards the use of monetary indicators – such as e. g. the bank of england – confirms my assessment