institutions. the asian crises in 1997 - 1998 and the recent experience of argentina are examples of such modern twin crises. another challenge related to the massive and liberalised capital flows lies in the area of international fraud and money laundering. the detection of such activities is a crucial preventive policy objective. money laundering enables criminal activities to grow and cause further damage, the most serious case being terrorist financing. it also leads to potentially high moral and reputational costs for the financial system and for society at large. finally, it generates inefficiencies and volatility in the allocation of resources, as launderers move their funds not in response to economic rationale, but in an effort to disguise the origin of their money. in the end, this runs counter to the desired benefits of financial liberalisation. however, in an environment where private capital moves quickly from one country to another without any permission being required, seeking the best short - term returns, it is naturally more difficult to detect fraudulent or money - laundering transactions. the environment is also made more challenging by the growing sophistication of financial products in the liberalised and globalised markets and by frequent use of off - shore centres for tax - optimisation purposes. the ongoing financial innovations and recent negative experience have led to a widespread conviction that the international policy and financial architecture needs to be strengthened. moreover, it has become widely understood that regulation must be co - ordinated internationally, as tightening it in only some markets and / or countries might merely shift the negative phenomena to other places, without reducing their overall severity. there have been numerous suggestions pointing in this direction, the most ambitious of which include proposals to establish a global lender of last resort and / or a supervisor. so far, however, the actual solution has been the creation of a comprehensive set of international standards and recommendations by international organisations. i consider this approach to be appropriate, as it fosters the desired degree of international standardisation of the rules, yet leaves enough room to take into account the specific features of each country and its legal system. in the macroeconomic policy sphere, the key set of international standards for monetary, financial and fiscal policies are embodied in the code of good practices on transparency in monetary and financial policies and the code of good practices in fiscal transparency, approved in 1999 and 2001 respectively. among other things, these principles deal with the independence of central banks and financial regulators, restrictions on monetary financing of state budgets, greater transparency of policy - making,

than falling over the last 10 years or so. this is manifested in the fact that the czech republic is the second biggest producer of cars per head in the world. moreover, the czech republic and slovakia ( the eurozone country ) – which formed a single state until 1993 – are together by far the biggest car - producing countries in the world in per capita terms. with 150 cars produced per every 1, 000 citizens these two countries are well ahead of south korea and germany combined in per head metrics. many of my friends in the real economy say that the czech republic is a country where everything is produced, from planes, through turbines, cars, buses, locomotives and guns, to bearings and brushes. whatever you need to produce you will always find at least one factory capable of making it, the anecdotal evidence seems to suggest. the question we face is rather whether we are overindustrialised for a country of our size. furthermore, yesterday i heard many comments about the trade deficits of numerous countries in the eurozone with germany. again, not in our case. if you look at a map of europe you won ’ t 1 / 3 bis central bankers'speeches be surprised to learn that germany is by far our biggest trading partner, with more than 30 % of our exports going there and with the biggest proportion of foreign investment in the czech republic coming from germany. but you might be surprised when i tell you that the czech republic is one of the few countries having a trade surplus, not a trade deficit, with germany. we export more to germany than we import from it. and that trade surplus has been increasing over time. with currently the lowest unemployment rate in the eu, decreasing public debt, yields on some government bonds below those in germany ( which is chiefly because of the current monetary policy of my bank ), and the state budget this year heading for a surplus, you might think my country is almost an economic paradise. are people happy? not really. they have other issues that frustrate them, such as why average wages are still two to three times lower than those in germany and many other countries after 25 years of transition, when at the same time many products carrying the “ made in germany ” label are assembled on our territory. or why so many companies pay such large dividends to owners abroad and we are unable to be attractive enough for foreign capital to be reinvested on our soil. and this is us – we have a tendency not to