awareness and to prepare them for the cash changeover at the beginning of 2002, the governing council agreed to organise a series of conferences on euro changeover issues in the course of 2001. these conferences will bring together the key parties involved in the euro cash changeover process, both at the national and at the european level, with a view to focusing on the cash changeover preparations. this action should also be seen against the background of the conclusions of the european council meeting in nice on 7 to 9 december 2000. third, the governing council decided that tests on the euro banknotes will be carried out in all euro area countries in 2001. these tests will offer companies an opportunity to check and fine - tune their cash and / or vending machines and sensors with regard to their being able to recognise and accept euro banknotes. they will be organised by the euro area national central banks ; the bank of england will also be invited to participate. the ecb will monitor the test scenario in order to ensure a consistent approach and will act as the contact point for companies registered in a country without a test centre. fourth, further to the ecb ’ s press release of 3 august 2000, when the decisions of the governing council regarding the euro area financial modalities for the 2002 cash changeover were announced, the governing council agreed on general principles for the so - called frontloading and sub - frontloading of euro banknotes outside the euro area as from 1 december 2001. today ’ s decision, which complements the principles agreed with regard to the frontloading and subfrontloading of euro banknotes inside the euro area, has to be seen as a contribution to ensuring a smooth cash changeover in 2002. you will find further information relating to this decision in a separate press release to be issued this afternoon. with regard to target, the governing council decided to establish a long - term calendar of target operating days to be applied from 2002 onwards. the establishment of such a common long - term calendar was deemed necessary in order to reduce uncertainties for financial markets. in addition to saturdays and sundays, target as a whole, including both domestic and cross - border transactions, will be closed for a total of six days in the calendar year. you will find further information relating to this decision in a separate press release to be issued this afternoon. the governing council also adopted several legal acts related to the field of accounting, which will be published shortly in the official journal of the european communities. these acts relate to the legal

of any financial firm, but these are disproportionately high in the case of large, complex and interconnected firms. although the moniker is “ too big to fail ”, the magnitude of these externalities does not depend simply on size. the size of the externalities also depends on the particular mix of business activities and the degree of interconnectedness with the rest of the financial industry. one important element is the importance of the services the firm provides to the broader financial system and the economy and the ease with which customers can move their business to other providers. another is the extent to which the firm ’ s structure and activities create the potential for contagion – that is, direct losses for counterparties, fire sales of assets held by other this would presumably require legislation. bis central bankers ’ speeches leveraged financial institutions, or loss of confidence that might precipitate runs on other firms with similar business models. the presence of large negative externalities creates a dilemma for policymakers when such firms are in danger of failing, particularly if the wider financial system is also under stress at the same moment. at that point in time, the expected costs to society of failure are very large compared to the short - run costs from providing the extraordinary liquidity support, capital or other emergency assistance necessary to prevent catastrophic failure. the market ’ s belief that a tbtf firm is more likely to be rescued in the event of distress than other firms weakens the degree of market discipline exerted by capital providers and counterparties. this reduces the firm ’ s cost of funds and incents the firm to take more risk than would be the case if there were no prospect of rescue and funding costs were higher. the fact that firms deemed by the market to be tbtf enjoy an artificial subsidy in the form of lower funding costs distorts competition to the detriment of smaller, less complex firms. this advantage, in turn, creates an unfortunate incentive for firms to get even larger and more complex. the funding benefit of being seen to be tbtf causes the financial system to become artificially skewed toward larger and more complex firms – in ways that are unrelated to true economies of scale and scope. now to be clear, i don ’ t believe that firms necessarily deliberately set out to become tbtf. nor do i think that tbtf was the main cause of the breakdown in market discipline that preceded the financial crisis. many factors were at work, including the failure to grasp the riskiness