about the future and knowing that investment is a sunk cost, may choose to postpone investment in order to obtain further information about future market conditions. one can show that, in this case, the required rate of return to undertake the investment project increases. it is clear that, hereby, uncertainty introduces additional frictions in the investment decision process, which are likely to temper the effect of a change in the policy - controlled interest rates. therefore, also in this respect, the monetary authorities need to evaluate the precise timing and magnitude of these frictions, which are caused by uncertainty. as to the requirement to use micro data, it is known that aggregation can blur identification of important parts of the behaviour of economic agents. so, studies at the aggregate level often fail to find an economically significant relation between investment and the user cost of capital, a relation of the utmost importance for the transmission of monetary policy. this failure is attributed in literature to the so - called simultaneity bias. using micro data allows alleviating these problems. moreover, micro data allow analysing important economic questions that cannot be addressed using aggregate data sets. this is precisely the case if one wants to identify the existence of financial frictions, because here the individual balance sheet position of the particular firm matters. next, i want to review the importance of the launch of the euro and of the ecb ’ s price stability policy for investment behaviour. the introduction of the single currency three years ago provoked fundamental changes in the environment in which the public and the private sector operate. first, the most apparent change has been the elimination of exchange rate risks. together with the lower transaction costs and more transparent markets, this has created new opportunities for companies within the euro area. second, the euro has given impetus to the process of financial integration by enhancing the widening and deepening of the euro area financial markets. this evolution may appear to be beneficial for firms, which were or still are financially constrained and unable to execute all their investment plans. especially young and risky firms often suffer from insufficient tangible assets, that might serve as collateral for external funds, and / or develop activities that are highly risky in terms of future returns. since these are typically the enterprises which tend to bring new technologies to the market, financial market deepening, as triggered by the euro, may contribute to boost investment and economic growth. although with the launch of the euro, the exchange rates of the currencies of the euro area countries became irrevocably

##flagging in explaining our actions and, if possible, winning support, because the ultimate foundation of the independence of a central bank is not a law, nor even a treaty, but the acceptance by the people concerned of the policy being implemented. with this in mind, i think it was among others wise to keep the bank ’ s council of regency in existence, even if it has finally lost all monetary power. it offers an irreplaceable opportunity for dialogue between the directors of the central bank and the experts representing the main spheres of belgian society. the bank ’ s board of directors have duties towards the population ; they also have duties towards the staff of the bank. the standards expected of the bank and its staff are traditionally high and have been accentuated by the profound changes which i have already mentioned. we need to adapt our organisation without being over - hasty but also without dragging our feet, because anticipating probable developments is the best way of controlling them. our staff, thanks to whom the switch to monetary union, in particular, was successfully accomplished, work hard and efficiently, and we still expect a great deal of them in meeting the challenges ahead and fulfilling our ambitions. but we must also be able to define for our staff - and this must be done in collaboration with our partners in the european central bank and the eurosystem - clear prospects for the foreseeable future, without which, we know, enthusiasm could give way to bitterness. my colleagues on the board of directors and i myself have held a strategic reflection aimed at increasing the quality of the bank ’ s response to today ’ s challenges, and especially the challenges of tomorrow. that reflection will shortly be extended, by degrees, to include all our staff. i have no doubt that they will enrich the discussion and that together we shall be able to realise the objective of a bank that is ever better equipped to meet the expectations of belgian society, and to maintain its position in the concert of europe and in international cooperation. we shall probably need to specialise more, perhaps giving up certain activities ; we shall undoubtedly need to adjust the scale of others, but we shall also have to develop our action in fields whose importance is increasing. i will give two examples. the national bank of belgium like all central banks, has since long shown an interest in the security and stability of the financial system. but due to its integration in the european system of central banks, the bank has been given an explicit responsibility in this field and the belgian