##al structure in order to make possible efficient and cost - effective supervision. · supervisors should be in close proximity to those who are to be supervised, and at the same time not under too much political influence. · if regulatory powers are shared among several institutions, there has to be a clear definition of powers and responsibilities. an efficient structuring of the flow of information and of the cooperation between the supervisory bodies involved is also important. · harmonised supervisory rules as well as their consistent application in practice are essential for creating a " level playing field " for the financial institutions in the different sectors. here in the united states, the role played by the federal reserve in financial supervision is not only well recognised but regarded as indispensable. in europe, however, that role is hotly debated. in addition to the above - mentioned general requirements, i would also like to mention some aspects which argue for central banks having a substantial involvement in supervision. · owing to the globalisation of financial markets and the accompanying profound structural changes within individual banking systems, not only microprudential institutional supervision but also looking at the implications for the financial system as a whole are becoming ever more important. · in this context, central banks are particularly affected since a stable financial system is an essential prerequisite of monetary policy. combining the practical supervision of institutions with the analysis of the stability of the financial system as a whole - " the marrying of microand macro - prudential analysis " – as the general secretary of the " bank for international settlements ", andrew crockett, once put it – brings benefits for supervision and monetary policy. effective financial market supervision relies on its own direct access to the relevant information. especially when there is an impending crisis, the key factors are · how quickly crucial information is available to those parties who need it, · how extensive that information is, · that the information is interpreted correctly · and that an appropriate set of instruents for countermeasures is available. for direct access to information, proximity both to the financial markets and to the institutions is an advantage. supervisors, who are active in the markets themselves and know the market participants from their own business relationships, possess major additional sources of information. it is precisely the central banks which maintain these permanent contacts – not only for their monetary policy operations but also because of their role in payment systems. central banks are therefore in a position to identify problems within the financial system earlier than pure bank supervisors are able to. the central

of part - time work. finally, with the help of germany ’ s training system it has been possible to keep youth unemployment at a comparatively low level by european standards. according to eurostat figures, the unemployment rate among under - 25 - year - olds amounted most recently to 9. 3 %, compared with 16. 4 % in the euro area as a whole. iii. tax and social policies all things considered, the underlying conditions for the german economy have also been improved by the tax reform that was adopted two years ago. for incorporated enterprises, corporation tax was lowered from 40 % for retained profits ( and 30 % for distributed profits ) to 25 %. for non - corporations, the previous burden imposed by trade tax has largely been removed. furthermore, their situation is also being eased by the fact that the income tax scale is to be lowered in stages until 2005. the tax reform makes restructuring in the corporate sector easier because profits from sales of corporations ’ participating interests are no longer subject to taxation. however, the tax depreciation facilities for spending on fixed assets have been made worse. there has been progress in germany in the field of old - age pension provisions. the pension reform, which was adopted last year, pursues two objectives simultaneously. first, payments under the state pay - as - you - go scheme are being cut back, and, second, private provision is being strengthened. pension increases over the coming years will remain below the level of increases in wages and salaries. this means that, in the long term, the increase in the contribution rate will be around 1½ percentage points lower than would otherwise have been the case. the pension reform will mainly benefit the younger generations. they will gain from the lower burden of contributions. they will have greater scope for making their own provision. for those who are older, however, the cutbacks in payments will weigh more heavily. the promotion of private old - age pension provisions nevertheless entails considerable burdens for the public sector budgets. furthermore, what is known as the “ riester pension ” has been constricted by a set of fairly tight regulations. the stock of capital that has been saved up may be paid out, for example, only in regular and life - long instalments. in contrast to this, at company level, a flexible instrument has been created in the form of the pension fund. not only does this allow largely free decisions on investment, it also makes defined contributions possible for the first time. precisely because of the