entry were progressively lifted. in short, the shift toward a more liberalised system together with the quick expansion of new products and markets has greatly increased uncertainties and risks for financial sectors. this was not immediately recognised by many market participants who had previously been sheltered by the existing regulation. as a result, individual bank failures and banking crises, quasi non - existent between the end of the forties and the early seventies, became all too frequent during the past two decades. in this context, the absence of significant problems within the belgian banking sector during the recent period must be considered more an exception than a rule. despite deregulation there is still a major role to be played by public authorities, among others in the field of competition rules, consumer protection, fight against money laundering... and, of course, central banking. central banks indeed have to provide stability, which certainly does not mean " no change " but, on the contrary, building the best foundations for a sustainable dynamism. in doing so, central banks will cope with the evolving environment shaped by technical progress, by deregulation and globalisation and, last but not least in europe, by the single currency. * * * as regards the first wing of central banking, monetary stability, central banks have to provide a durable anchor in order for the price system to appropriately guide economic decisions. a stable value of money is all the more necessary for preserving the information value of relative prices in a changing world, where decisions have to be taken rapidly. maintaining price stability is the primary objective of monetary policy, not only for the eurosystem - according to the treaty of maastricht - but also for every central bank. nowadays the only regulations central banks rely on in designing the operational framework of monetary policy are the monopoly of banknote issuance and reserve requirements. the eurosystem fully respects the principle of an open market economy with free competition, as enshrined in the treaty. its main instrument is the weekly allotment of credit by euro area - wide tenders. minimum reserves, which are remunerated, have a stabilisation function, thanks to an averaging provision, and are enlarging the structural liquidity shortage of the money market. as the development of e - money is liable to weaken the leverage of the eurosystem and in order to provide for a level playing field, e - money issuers should not escape reserve requirements. a european directive of last year rightly broadens the

guy quaden : central banking in an evolving environment speech by mr guy quaden, governor of the national bank of belgium, at the 23rd suerf colloquium, brussels, 27 october 2001. * * * ladies and gentlemen, i am particularly pleased to speak before this eminent forum and to have the opportunity of addressing the topic " technology and finance " from a central banker's point of view. technology and the challenges it raises for financial markets is a most appropriate theme for this colloquium. on the one hand, technology is closely intertwined with the evolution of many other factors affecting financial markets and, so, allows coverage of a wide range of issues. on the other hand, it has farreaching consequences for all market participants, and this certainly includes central banks. in a first part i propose to briefly recall how technology has impacted on our macroeconomic and regulatory environment. in the next two parts i would like to sketch the main consequences of these developments on what my colleagues at the bank of england have described as the two wings of central banking, i. e. monetary and financial stability. * * * technology is a powerful factor of change in our macroeconomic environment. so, a few years ago, our colleagues of the federal reserve had to recognize that something new was happening in the us economy : a persistent higher growth and lower unemployment without the emergence of inflationary strains. this was related, at least partly, to the revolution in the information and communication technologies, which increased productivity growth and fostered efficiency in the labour market too. a third feature of the so - called new economy, the reduction in the variability of output growth, obviously proved to be short - lived! but a wave of over - pessimism should not submerge the previous wave of over - optimism. the question whether the american economy is still on a higher trend productivity growth path remains open, as well as what the prospects for the european economy are in this respect. europe will benefit from a specific driving force, the completion of the single market with the new single currency, which should trigger further structural reforms and hence foster innovative energies. technology also radically transformed the financial sector, which by the way greatly contributed to the new technological wave by financing it. inew techniques in the treatment, the storage and the transfer of information exerted profound effects on a sector which is largely an information based industry. in a first stage, information technologies made it possible to develop more sophisticated products, to build up