their decisions mainly reflect other considerations, such as the choice of a currency as a nominal anchor for the conduct of monetary policy, the currency composition of external debt or trade invoicing. in this context, allow me to draw your attention to the fact that some 25 countries use the euro as a reference currency for their exchange rate polices. 1 as those factors relate to long - term policy choices or economic developments, they can be expected to result in strong inertia in the allocation and management of reserves by central banks. there are, however, exceptions : for example, the authorities in russia announced in december 2005 that they had increased the share of the euro in foreign exchange reserves to 40 % ( from 33 % in mid - 2005 ). to some extent, this decision may have been linked to a more prominent role of the euro in the bank of russia ’ s currency basket for the management of exchange rate volatility. at the same time, in some countries, notably oil - or other commodity - exporting countries, an increasing proportion of the “ official ” foreign currency assets is held outside central banks by public investment agencies. these agencies may invest in a wide spectrum of assets denominated in various currencies, with the aim of maximising the expected return on their holdings. iii. prospects for the further development of the international role of the euro given these observations, what can be expected with regard to the relative importance of the euro in global official reserves in the future? as is well - known, prediction is very difficult, especially about the future. and you will understand that i will not speculate on this. that said, i will explore, more generally, the prospects for the further development of the international role of the euro. on this point, allow me to make a general pertinent remark. clearly, a necessary condition for fostering the international role of a currency is its credibility, as determined by the stability of its internal value. the ecb, by preserving price stability in the euro area, “ sets the stage ” and establishes a necessary condition for the wider international use of the euro. but whether or not the international importance of the euro will further increase depends on many other factors as well, in particular the investment decisions of private agents and public authorities. traditionally, a key determinant of the international use of a currency – especially as a means of exchange – has been trade, the very theme of this year ’ s european banking congress. from the dr

anchored at levels consistent with our definition of price stability. in the spirit of ludwig erhard, the ecb is making its contribution to the social market economy. the ecb ’ s response and instruments having the same objective does not necessarily mean using the same instruments. the ecb has inherited its objective from the bundesbank, but it is operating in a new and different environment. bis central bankers ’ speeches today ’ s economic and monetary union is larger and more diverse than a single country, such as germany. it is highly integrated but still at times fragmented. and it comprises a very large number of policy - makers on fiscal, structural and other economic matters. all policy - makers have to recognise that we belong to emu together and that policies as well as policy inaction create spillovers for other members. this is an enormous responsibility for governments and other economic policy - makers. for the ecb to operate in this environment, and to be responsible and effective in accomplishing its objective, we have to use a wide range of instruments. some instruments are standard, some non - standard, but all are based on the ecb statutes. the use of these instruments has been essential in safeguarding our objective during the financial and sovereign debt crisis. in the run - up to the crisis, inappropriate fiscal, structural and other economic policies fostered an excessive build - up of risk in the financial sector and created vulnerabilities on a global scale. when the crisis erupted, these vulnerabilities placed a heavy burden on central banks. in particular, the threat of a financial meltdown jeopardised their capability to counteract downside risks to price stability. the ecb acted on that threat according to our unambiguous mandate to deliver price stability. we have reduced our main policy rates to historical lows. this contributed to stabilising investment and consumption decisions in the euro area. our actions prevented a steeper fall in aggregate demand and ensured the conditions for stable prices in the euro area. in a bank - based economy like the euro area, monetary policy works through banks, and banks lend to each other, based on mutual trust. in the crisis, that trust got lost, and the banks no longer lent to each other. facing the threat of a euro - area wide funding crisis, they turned to the central bank. we, the central bank, provided liquidity to banks because we have to work through them. they are our counterparts – and we had to act