dr. duisenberg discusses strategies for monetary policy in emu address by dr. w. f. duisenberg, president of the netherlands bank and of the bank for international settlements, on the occasion of the board meeting of the banking federation of the european union held in maastricht on 20 - 21 / 3 / 97. it is with great pleasure that i am addressing you on the european economic and monetary union here in maastricht today, the very location where that union was pieced together. it was here that we made a concerted effort some five years ago to lay the foundations for the economic and monetary stability of europe in the 21st century. since then we have been busily building on these foundations with the result that we now have the outlines of the european central bank. the framework for monetary policy contains three main elements : its primary objective, strategy and instruments. where the first is concerned, there can be no misunderstanding : the maastricht treaty prescribes that the overriding objective of ecb policy shall be price stability. knowing you all to be distinguished financial and monetary experts, i need hardly point out to you that to attain this objective, strategy must be transparent and credible. it is not for nothing that in recent months this issue has been figuring prominently on the agenda of the european monetary institute, the precursor of the ecb. let me give you a brief impression of the consultations held there. as soon as it has been decided in early 1998 which countries are to take part in emu, the ecb will decide what monetary strategy to pursue. generally speaking, there are two aspects to such a strategy : internal decision - making within the central bank and, equally important, the presentation of its measures to the outside world. in fact both aspects hinge on the question which variables should underlie the central banks interest rate policy and what weight should be assigned to each of these variables. after all, monetary policy is complicated by the fact that inflation reacts to the central bank ’ s interest rate decisions with long and varied lags. actual inflation rates are therefore not cut out to be a gauge of monetary conditions. the central bank should focus on information which provides insight into future inflation, and possibly formulate a number of intermediate objectives, the so - termed intermediate target variables : in europe today the money supply and the exchange rate often figure as such. the exchange rate in particular plays a major role in open economies, where inflation is due largely to external

is one of the better digitally defended sectors in the economy. as it should be. but given the size and urgency of the threat, we need to do even more to keep financial services safe. this is why cyber resilience will absolutely be a key focus area in our supervision of the financial industry in the coming years. this goes both for de nederlandsche bank, and for the european central bank. our aim is to make financial services safer against cyber threats. not only by increasing the resilience of the financial sector itself, but also by stepping up the robustness of the entire chain of ict service providers. dora, the european digital operational resilience act, that came into effect at the beginning of this year, gives us additional tools to accomplish this aim. to start with, under dora, threat - led penetration tests are mandatory for the largest financial institutions in europe. in the netherlands we have been conducting these kinds of tests voluntarily for over eight years with good results, and we are very pleased that it is now becoming the norm at the european level. but dora also imposes stricter requirements for managing cyber risks in outsourcing chains. for example, financial firms face stricter rules for conducting due diligence on potential ict providers. as a result, fintechs may also experience more stringent due diligence from financial sector customers. and very importantly, under dora, european supervisors can conduct inspections of critical third - party ict service providers in tandem with national supervisory authorities. we expect bigtechs like google and microsoft to be placed under eu - wide supervision. and, just as with the banks, we are going to test their readiness to detect and withstand cyberattacks. 2 / 4 bis - central bankers'speeches despite all efforts, there is no such thing as perfect cyber security. it is therefore vital that financial institutions take measures to recover quickly after cyber incidents. this is crucial to ensure that services can continue and people don't lose trust in financial firms or the financial sector as a whole. the results of the ecb's 2024 cyber stress test show that there is room for improvement on the recovery front. so it's a very good thing that dora also imposes new requirements on institutions'continuity plans and backup policies. they need to develop a culture where cyber incidents are quickly detected and reported, they need to have their playbooks in place and they need to have clearly defined management roles and responsibilities. these are key ingredients for