participants seek to steer the entire market, i. e. acting as herd leader. let ’ s look at an aspect that interests me particularly : monetary policy. the opinions expressed by analysts on monetary policy decisions often concern not only the impact of a given decision on the markets, but the substance of the decision, namely whether it is appropriate or not. the parameters according to which the analyst expresses his / her views are however not transparent. it is unclear, in fact, if the analyst is expressing an opinion based on an objective function which is the same as that of the monetary authority – price stability in the ecb ’ s case – or based on his / her specific interest, particularly his / her see, for example, bolton, p., freixas, x., shapiro, j. ( 2007 ), “ conflicts of interest, information provision, and competition in the financial services industry ”, journal of financial economics, 85, pp. 297 – 330 ; benabou, r. and g. laroque ( 1992 ) “ using privileged information to manipulate markets : insiders, gurus, and credibility ”, quarterly journal of economics, 107, pp. 921 – 948. for an overview, see, for example, mehran, h. and r. stulz ( 2007 ), “ the economics of conflicts of interest in financial institutions ”, journal of financial economics, 85, 267 – 296. investment choices. one might ask, for example, if a decision to increase interest rates would be judged right or wrong by a financial market participant based on the outlook for inflation – or based on the speculative position that the market participant itself has taken. what, then, should we think of the views that are expressed even before the central bank takes its decision? what are the criteria when a financial market participant expresses an opinion on what the central bank should do? do the criteria depend on the speculative positions it has taken or on other, more general criteria? i ’ ll take a concrete example, which is not related to the decision on interest rates but on the collateral the central bank accepts in exchange for funding provided to the market. on monday 3 may the european central bank decided to no longer follow the rating agencies when assessing the sovereign debt of a country that has an adjustment programme with the imf and the european union – a programme which the ecb has judged positively. it was a logical decision for several reasons. first, while for a company or

the media and public attention concentrates on developments in the foreign exchange market. in my view, it is mistaken to evaluate the experience so far by primarily looking at the developments in the external value of the euro. this tends to eclipse the overall bright picture so far. when was inflation lower in the past, even with the recent tripling of oil prices? when was economic growth in the euro area as high as it is at the moment? did we not make significant progress in fiscal consolidation over the past decade? is not unemployment finally falling? are we not seeing the integration of financial markets in europe? europe is doing better than even europeans themselves appear to perceive. above all, monetary union is about creating the conditions for long - lasting stability and prosperity in our countries and cannot be reduced to a sort of race among major currencies. historical evidence shows that, over longer horizons, the fundamentals of the economy - such as domestic price stability, the competitiveness of its products, the growth performance - ultimately determine the external value of a currency. based on this evidence, as i have already said on other occasions, i am very confident that a strong potential for the euro exists. having said that, let me add that we view the possible negative impact of the excessive depreciation of the currency on the prospects for price stability in the euro area with concern. indeed, the recent intervention in the foreign exchange markets has shown that we take this concern very seriously and that we are ready to back up our words with deeds. furthermore, since a common concern has arisen about the potential implications of a low level of the euro for the world economy, the intervention has shown the determination of the world ’ s major central banks to act jointly, when needed. external presentation of monetary policy decisions overall, it can be said that the monetary policy decisions of the ecb have served the primary objective of maintaining price stability in the euro area well. the strategy has been effective with respect to its internal role of guiding the ecb ’ s policy choices during a period of considerable uncertainty. at the same time, we recognise that a high degree of common understanding between the central bank and the public at large is in our best interests because, by reducing uncertainty and bolstering credibility, it facilitates the conduct of monetary policy. this naturally brings me to the external, presentational role of the strategy and to the issue of transparency in the presentation of policy decisions - an issue that has also received great attention in recent years, and