and as a measure for covering possible foreign exchange risks for the ecb, the governing council endorsed, in line with the statute of the escb, an ecb recommendation for a council regulation which would authorise the ecb to increase its capital from the current level of 5 billion euros to up to twice that amount. ( f ) monetary and foreign exchange policy further decisions have also been taken with regard to preparing the monetary and foreign exchange policy of the euro area. on previous occasions i have mentioned to you that legal acts are under preparation which specify general principles to be followed by the national central banks when carrying out operations in domestic assets and liabilities and in foreign exchange reserve assets remaining with the national central banks. such instruments, which are based on provisions of the statute of the escb, aim from a legal point of view at ensuring the singleness of the ecb ’ s monetary policy and the consistency of such transactions with the community ’ s exchange rate and monetary policies. against this background, the governing council today adopted an ecb guideline which establishes certain reporting obligations for the national central banks ’ domestic asset and liability management operations and subjects such transactions to the prior approval of the ecb whenever they exceed a certain amount. a similar ecb guideline was adopted which subjects all operations in foreign reserve assets – including gold – which exceed a certain amount to the approval of the ecb. in addition, the governing council adopted an ecb guideline according to which any participating member state ’ s transactions whose foreign exchange working balances which exceed a certain amount must be notified to the ecb in advance. a similar arrangement is envisaged between the ecb and the commission of the european communities for all foreign exchange transactions carried out in the context of implementing the commission ’ s budget. in the context of the statutory function of the escb to contribute to the smooth conduct of policies of competent authorities in the field of banking supervision and financial stability, the governing council discussed the main driving forces that are likely to affect the eu banking systems in the medium and long term, including the establishment of emu. the council members hold the view that the establishment of emu is expected to reinforce the structural tendencies that are already under way in the eu banking systems. these tendencies include the reduction of excess capacity, pressure on profitability, enhanced competition, increased internationalisation and geographical diversification. one important aspect is the fact that eu banks seem to have significantly increased their awareness of the strategic implications of the introduction of the

policy to the fostering of growth and employment. dealing with structural problems is the task of policies other than monetary policy. let me now give the floor to the vice - president to report on various aspects of the preparatory work for stage three. ( a ) preparations for the “ changeover weekend ” with less than 60 days to go before the start of stage three, we are obviously attaching particular importance to the provision of a framework allowing for a smooth changeover to the euro. we began our preparations a long time ago and i am confident that the escb will be in a position to deliver its entire complex infrastructure to the markets by the morning of 4 january 1999. i expect the banking and financial community in the euro area to be fully aware both of the logistical challenge that the changeover weekend represents and of the need for careful preparation. given the concentration of migration operations to the euro to be conducted by a multitude of financial agents ( i. e. payment systems, securities settlement systems, custodians, individual banks, exchanges and financial information providers ) in the period from 31 december 1998 to 4 january 1999, the escb is preparing to work together with other public authorities to orchestrate the necessary policy responses to any unexpected events. to this end, the governing council has set up an ad hoc “ changeover weekend committee ” which will organise the monitoring of developments vis - a - vis the final migration to the euro within the ecb and the national central banks and in the banking and financial industry, both prior to and during the changeover weekend. additional details on the preparation of the changeover weekend are provided in a separate press release which is to be issued to you this evening. ( b ) payment systems issues with regard to euro payment and settlement systems, i should like to draw your attention to recent developments which suggest that many market participants consider the euro a special currency to which the traditional rules applied elsewhere in the developed world would not necessarily be applicable. initiatives were taken, or allowed to develop, that have no precedent in the arrangements concerning other currencies. this relates in particular to the granting of payment finality and intraday credit in a currency other than a country ’ s own. therefore, the governing council considered it appropriate to issue a policy statement clearly spelling out the fact that the rules which apply to all of the other currencies in the world will also apply to the euro, and that the ecb bears the same responsibilities as all the other central banks in the world