financial markets that already has taken place or is likely to come in the near future. let me next turn to the debate about the european regulatory framework. the economic and financial committee ( efc ) has only recently provided an assessment of existing arrangements in the brower report. a central result of this assessment was that the current framework that strongly relies on national responsibilities is appropriate. the report found that there is at the same time a need to enhance arrangements for cross - border and cross - sectional co - operation, to improve the alignment of supervisory practices and to reinforce the collaboration between supervisory and central banking functions. i want to point out that developments have already started that implement some of these recommendations. let me just mention the activities of the banking supervision committee ( bsc ) of the european system of central banks ( escb ). these activities strongly rely on the close cooperation between central banks and banking supervision authorities. not only in the area of banking supervision, but also in recent attempts to implement the lamfalussy recommendations in the field of security market regulation considerable progress has been made. consistent and efficient implementation of regulatory rules has been promoted by new institutional arrangements delegating rule - making powers to a committee or regulators whereas implementation at the national level is undertaken through a committee of supervisors. these two examples, which i have briefly touched here, illustrate that initiatives are under way and debate is ongoing. however, not all of the recommendations of the brower report have been implemented and many other issues still need further investigation and debate. but developments show that we are heading in the right direction. i have argued that policy makers and central banks are well aware of the regulatory challenges for european financial markets. they have already tried to find some practical answers to these challenges. these answers are based on the principles of national responsibility, transnational co - operation and the close involvement of central banks into the supervision of the banking system. clearly, many issues in this process are still open and need further discussion. but i am sure that your conference will make an important contribution towards a deeper understanding of those issues and to point out directions, where further activities are needed. cepr / esi price for the best central bank research paper ladies and gentlemen, it is a great pleasure now for me to announce the winner of the newly established cepr / esi prize for the best central bank research paper. this price shall promote high - quality research at european central banks, both within and outside the eurosystem. it is important to acknowledge research

. 3. the key tasks of the eurosystem let me now turn to the key tasks of the eurosystem. the treaty establishing the european community ( article 105. 2 ) clearly defines the community responsibilities in the area of monetary policy. accordingly, the basic tasks to be carried out by the eurosystem are • to define and implement the monetary policy of the euro area ; • to conduct foreign exchange operations consistent with the monetary policy of the euro area ; • to hold and manage the official foreign reserves of the member states ; and • to promote the smooth operation of payment systems. in addition, there is a very strict rule prohibiting the monetary financing of the public sector that makes clear that monetary policy and fiscal policy should be two separate areas of policy. furthermore, the eurosystem contributes to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system. moreover, the national central banks may continue to carry out other tasks and activities, provided that they are in line with the single monetary policy. the decision - making bodies of the eurosystem are the executive board and the governing council of the ecb. the general council is constituted as a third decision - making body of the ecb for as long as there are member states which have not yet adopted the euro. the executive board of the ecb comprises the president, the vice - president and four other members, all chosen from among persons of recognized standing and professional experience in monetary or banking matters. as you know, former oenb deputy governor tumpel - gugerell is a member of the executive board of the ecb. the members of the executive board of the ecb are appointed by the eu heads of state or government after a hearing before the european parliament. the main responsibilities of the executive board are to implement monetary policy in accordance with the guidelines and decisions laid down by the governing council of the ecb and, in doing so, to give the necessary instructions to the national central banks. the governing council comprises the six members of the executive board and the governors of the national central banks of the member states which have adopted the euro. the governing council takes decisions with a simple majority according to the “ one member, one vote ” principle. the responsibilities of the governing council are : • to adopt the guidelines and take the decisions necessary to ensure the performance of the tasks entrusted to the eurosystem ; • to formulate the monetary policy