committee has tried to balance the benefits of greater diversification of the liquidity pool against the cost of including slightly lower quality assets. • we have also changed some of the assumed inflow and outflow rates that determine the size of the pool of liquid assets that a bank is required to hold. • as in the case of the capital conservation buffer, the standards now make very clear that liquidity is to be built up and maintained in good times so that it can be used in times of need. in other words, liquidity is not useful if it is frozen. in addition, in light of the considerable stress facing banking systems in some regions of the world, the committee revised the implementation plan of the lcr by introducing a phase - in arrangement. the lcr will come into force as planned in 2015, although banks now will have until 1 january 2019 to meet the standard in full. nevertheless, i expect many banks will choose to move to the higher standard more quickly. in announcing the revisions to the lcr, many headline writers categorised it as some kind of win for the banking industry over the regulators. this is simplistic. we had an observation period for good reason : to make sure we got the settings right. there was, i think, legitimate concern that, as a minimum standard, the 2010 formulation of the lcr may have been calibrated too conservatively overall. for example, the treatment of traditional retail and commercial banking was probably too harsh, and this has been adjusted. equally the treatment of derivative - related risks was probably too weak, and so that has been adjusted too. much has been made of the inclusion of rmbs in the definition of high quality liquid assets, but the eligibility criteria are tight and the initial perception that the committee had granted carte blanche to the securitisation sector is well wide of the mark. as the chairman of the basel committee ’ s governing body, governor king of the bank of england, said when announcing the full set of changes, they are designed to make the lcr “ more realistic ”. i think this sums it up very well. of course, the overall impact of the changes is to improve the reported lcr of the banking system. based on our most recent data ( end june 2012 ), we estimate that the weighted average lcr for a sample of roughly 200 of the world ’ s largest banks is around 125 %, compared with a little over 100 % for the previous calibration

axel a weber : european inflation dynamics and inflation convergence speech by professor dr axel a weber, president of the deutsche bundesbank, at the conference “ open macro models and policy in the development of the european economy ” at the european university institute, florence, 15 october 2004. the references can be found on the deutsche bundesbank ’ s website. * i. * * introduction maintaining price stability in the euro area is the primary objective of the single monetary policy of the european central bank. in following this goal, monetary policy cannot prevent, however, inflation rates from differing between member countries of emu. for example, over the last twelve months, the year - on - year rates of the hicp for germany, austria and the netherlands averaged around 1½ percent, while spain and greece showed rates of around 3 percent. the existence of enduring inflation differentials within the euro area has resulted in a lively debate on the appropriateness of the stance of the single monetary policy for countries on the lower and on the upper end of the distribution. accordingly, macroeconomists and central bankers alike have a considerable interest in measuring and understanding heterogeneity in euro area inflation rates. another aspect of euro area inflation that is currently discussed and examined is its dynamics - or more specifically - its persistence. the investigation of this topic has been stimulated by the observation that inflation in the euro area seems to respond so sluggishly to policy shifts. 1 in the following i would like to talk about both issues - inflation persistence and inflation dispersion which may be referred to as the time series dimension and the cross section dimension of the same phenomenon. ii. inflation persistence understanding the dynamics of inflation in the euro area is of natural interest to the eurosystem. for this reason, the “ inflation persistence network ” ( ipn ), a group of researchers from the ecb, my own institution and the other national central banks, was set up in 2003. 2 on the basis of a broad spectrum of different methods and datasets, e. g. individual consumer and producer prices, surveys on firms ’ price - setting behaviour, and aggregate inflation data, the ipn tries to shed some light on the patterns, determinants and implications of european inflation persistence. a crucial question that has to be answered is, of course, the proper definition and measurement of “ inflation persistence ”. the key problems with this issue become clear as soon as we think about how the term “ persistence ” is used