adoption of the euro without adjustment is not possible. to regard entry into emu as an easy way to solve or circumvent the current challenges surrounding the catching - up processes would be wrong. and a premature entry might aggravate current problems and put the credibility of emu at risk. policymakers have to be aware that the adoption of the euro represents a regime shift and thus, as governor constancio pointed out yesterday, need to learn the rules of the game in advance. the ecb has demonstrated its ability to act even under extraordinary circumstances – without compromising its price stability mandate. this has strengthened the ecb ’ s credibility. if the ecb is to continue to deliver price stability over the medium term, then the financial system has to be stable and function smoothly. it is first and foremost through that financial system that monetary policy impulses are transmitted to future price developments. it is indispensable to restore confidence and bring the global financial system back on a solid footing. it is crucial to understand the implications of globalised financial markets for the design of institutional arrangements for the prevention and resolution of financial crises. let me conclude : we are going through a period when solid institutions are needed around the globe. and solid institutions are expected to be disciplined. as such, central banks provide an anchor of confidence and stability in difficult times. this must not be put at risk by weakening or even “ lifting ” this anchor.

##ly. efficient financial markets also enhance the quality and availability of financial indicators which can provide useful signals for the formulation and conduct of monetary policy. • third, the ecb ’ s monetary policy strategy aimed at price stability, with its medium - term orientation and the prominent role it assigns to monetary analysis, allows monetary policy to address challenges that may arise from imbalances and potential instability in the financial markets. • fourth, central banks, through their financial stability monitoring and macro - prudential supervision contribute to safeguarding financial stability and thus complement the activities of the competent supervisory and regulatory authorities. • fifth, in the long run, financial stability and financial efficiency are complementary and should reinforce each other. in the short run, however, there can be circumstances in which tradeoffs between the two exist. further theoretical and empirical work is needed to elucidate the relationship between financial efficiency and stability, and the connection to central bank policy. this last comment indicates that we still have plenty of work to do. eddie george, the former governor of the bank of england, once remarked : “ central banks don ’ t have divine wisdom. they try to do the best analysis they can and must be prepared to stand or fall by the quality of that analysis. ” conferences like this one help us to enhance the quality of our analysis and our understanding of monetary policy issues – which is why we should look forward to the conferences of the foundation “ geld und wahrung ” next year, and in the years to come. thank you very much for your attention.