”. contagion has become an issue after the asian financial crisis. to define contagion is not a trivial issue. did countries suffer from crises in other economies because they were fundamentally in a similar position? or were economies infected despite sound fundamentals? how and when does contagion happen? can a country effectively “ immunise ” itself from contagion? tomorrow ’ s session will start with a panel on “ exchange rate regimes and worldwide stability ”. exchange rate regimes are among the main suspects in creating financial instability - if domestic macroeconomic policies are not in line with the chosen exchange rate regime. in choosing an exchange rate regime, it has to be decided which is more important : the advantages afforded by flexibility for domestic policy or the monetary policy credibility that may be gained by an external anchor. contrary to the widely held bipolar view, intermediate exchange rate regimes have shown some durability. how can the choice of exchange rate systems contribute to worldwide stability? a panel on “ internationalisation of banks and the risk implications ” will attempt to shed light on the impact of banks ’ international assets on financial stability. it will strive to enquire into the net effect of financial institutions ’ international portfolio diversification on financial stability. the stabilising effects of international portfolio diversification contrast with potentially destabilising effects resulting from faulty risk assessment due to information asymmetries. the fifth and last panel of this conference will explore financial stability issues of “ financial systems in emerging markets ”. as regards investing financial institutions, the question is which specific risks they incur when “ setting up shop ” in emerging markets. as regards emerging markets, the internationalisation of the financial system has been deemed as both a blessing and a curse. host countries sometimes fear that an internationalisation of their banking systems, eg via foreign direct investment, will entail more volatility and more vulnerability. however, the east european has shown that internationalisation has had very positive effects on the efficiency of their financial systems and the economy in general. 4. concluding remarks this conference is academic in nature ; the majority of speakers therefore come from academia. thank you all for contributing to the second conference of the monetary stability foundation. i am glad that the bundesbank has again been successful in talking several distinguished policy makers into speaking at this conference. thank you for enhancing theoretical approaches with the view from the business of policy making. i am especially delighted that jean - claude trichet will join us tonight and will speak

axel a weber : financial stability and globalisation opening address by professor dr axel a weber, president of the deutsche bundesbank, at the second conference of the monetary stability foundation on “ financial stability and globalisation ”, frankfurt am main, 3 june 2004. * * * it is an exceptional pleasure and an honour for me to welcome you to the second conference of the monetary stability foundation. i would like to extend a special welcome to the distinguished members of the diplomatic corps present this afternoon, peter w bodde, us consul general in frankfurt and leonidas contovounesios, consul general of the hellenic republic in frankfurt. it is a great pleasure to be able to welcome governors of central banks from all over europe : jaime caruana, governor of the banco d ’ espana, ljubisa krgovic, governor of the central bank of montenegro, and dr jean - pierre roth, chairman of the governing board of the swiss national bank. i am exceptionally pleased to be able to welcome professor helmut schlesinger, president of the deutsche bundesbank from 1991 to 1993. i am glad to have with us today jurgen hettinger, president of the frankfurt regional office of the deutsche bundesbank. thank you for hosting this conference. and, last but not least, i would like welcome the distinguished speakers who will make this conference an inspiring event : professor giancarlo corsetti, professor gerhard illing, professor philip lane, professor andrew k rose, professor karlhans sauernheimer, associate professor philip e strahan. ladies and gentlemen! i came into office as president of the deutsche bundesbank only five weeks ago. i have my roots in academia, and in this line of work i have participated frequently in conferences on monetary issues, not least various conferences hosted by the institution i am now entrusted with. therefore, my introduction “ it is an exceptional pleasure and an honour ” is meant literally. 1. the importance of monetary stability the overarching purpose of the monetary stability foundation is to strengthen public awareness of the great importance of monetary stability. this objective is to be pursued mainly by means of financing research on monetary issues, thereby broadening the intellectual foundation of stability policy. in december 2002, the monetary stability foundation held a first conference. since then, developments - and debates - have underlined just how important the nonstop emphasis on stability is. i would like to briefly comment on three issues that stand out in this respect.