the policy behaviour of those issuers and holders of international currencies that are systemically relevant. the exchange rate and capital flow regimes are probably the core elements of the adjustment mechanism, since they define the degree of flexibility of each ims, i. e. its adaptability to changing economic circumstances. in contrast to the bretton woods system with fixed exchanges rates, semi - closed capital accounts and a strict adjustment mechanism, an ims such as the present one enjoys a much higher degree of adaptability. each country is free to choose its exchange rate and capital account regime, and the reserve - issuing countries face no ims - embedded limits to the creation of global liquidity. this is a fundamental strength of today ’ s system, but it may also become – as we will see – a major weakness to the extent that it creates scope for unsustainable domestic growth models and the ensuing accumulation of real and financial imbalances. bis central bankers ’ speeches what are the shortcomings of the present “ non - system ” besides the persistent external imbalances, there are many other shortcomings being mentioned about the present “ non - system ”. i can mention a few of them : abrupt reversal of capital flows ; systematic inflows going from emerging to developed countries ; inefficient accumulation of reserves by emerging countries ; excessive exchange rate volatility ineffective to ensure external balance ; asymmetry of adjustment pressure between deficit and surplus countries ; absence of mechanisms to ensure the sufficient and timely supply of global liquidity in times of financial crises. this list means that, potentially, all the features of an ims can be at stake in the present discussion, contrary to what happened in the late nineties when the discussion revolved around the functioning of the financial sector and the crisis prevention and resolution in emerging economies. the debate then was not about the reform of the ims but rather about a new global financial architecture, meaning the international framework for safeguarding and ensuring the efficient functioning of the global financial system. today, after the start of the crisis in 2007, the issues under discussion are at the core of what constitutes an international monetary system : 1 ) are new international currencies necessary and / or unavoidable in the present circumstances? 2 ) should changes be introduced in the foreign exchange regime? 3 ) does the system need new and stronger instruments of liquidity provision, especially in times of financial crises? 4 ) what changes should be introduced in the adjustment

that time, the efforts of europe ’ s politicians and central bankers have confounded many sceptics by making the euro an economic and political reality. clearly, the transition to a single currency did not take place in a vacuum. on the contrary, a number of factors shaped the path towards emu. some of these factors had a positive impact. i am referring here, in particular, to the remarkable progress that has taken place in establishing a climate of stable prices throughout the european union. this development undoubtedly reflects the consensus that now exists among central bankers and politicians alike, concerning the appropriate role of monetary policy in the general conduct of economic policy. also, one should not forget the dramatic events of 1989, which not only led to german unification and the fall of the iron curtain but also redefined the parameters of the economic and political environment in europe. yet there were also other factors which, had it not been for the determination of those committed to emu, could have significantly delayed or even derailed the whole process. of these, the ems crisis of 1992 - 93 immediately springs to mind. as a result of this crisis, many of those who already doubted the feasibility of emu became increasingly sceptical as to whether we would actually achieve our stated goal. thus when we consider the events of the last decade in particular, we must appreciate that the driving force towards the introduction of a single currency was, above all, the political will of the actors involved. in this regard, belgium ’ s politicians and its central bankers should be congratulated on the commitment that kept their country at the forefront of the integration process. this commitment could and still can be seen at various levels. at the political level, the policies pursued both by the government and by the bank ensured that the belgian franc became a stabilising force in the ems and that belgium was ready to be a founding member of the euro area. this achievement owes a great deal to the efforts of many persons. i can only mention a few of them, such as former prime minister dehaene, the former governors verplaetse and godeaux, and the present governor quaden, who is often seen as mr. euro here in belgium. equally, sometimes behind the scenes, i should recall the dedication of persons both from the treasury and from the bank for their contributions to monetary union. among them i should like to single out two individuals. the first is jacques van ypersele de strihou who,