interior. surveillance has to play an important part in detecting weak spots in the framework. national and international supervisors can monitor the state of the framework and should intervene if necessary. the imf, the bis, and the financial stability forum, together with national authorities and private institutions, are part of the surveillance network for financial systems. the metaphor of the international finance architecture could be misleading, if we take it too literally. unfortunately, we do not have a single architect but many would - be architects who try to stabilise a permanently evolving and growing system. every single bilateral contract alters the financial system. the system needs stabilising elements from within. built - in incentives are crucial in setting up a sound and credible financial system. incentives for good corporate governance and sound practices within the financial community can discipline the market and therefore strengthen the system. the market participants themselves bear the main responsibility for financial stability. transparency is another precondition for sound and healthy financial markets. to fully reap the beneficial effects of market discipline, relevant and timely data about the financial system have to be published. the imf ’ s special data dissemination standards are a good example of transparency in the field of macroeconomics. iii especially in times of sluggish growth, the global financial system is vulnerable. the real economy and the financial system are closely connected. the impact may also work the other way around : financial crises can cause major frictions for the real economy, whether via a depression of sentiment, a credit crunch or negative wealth effects. therefore, monetary policy has to monitor financial market developments closely. moreover, stable and well functioning financial markets are in the own interest of central banks. the need for a proper monetary transmission process, for sound payment systems and for a stable banking sector provide ample reason for central bankers to care about the financial architecture. the surveillance structure in europe is currently under review. proposals made by the finance ministers of germany and the uk envisage new institutions or committees which could be seen as a potential nucleus for a european financial supervision authority. however, they favour the so called “ lamfalussy model ”, which originally was intended to reform the supervision of securities trading. this model is not easy to apply to the banking sector for at least two reasons. firstly, the surveillance issue is different in the banking sector. and secondly, the harmonisation of rules and conduct in the banking sector has already reached a high level. this is due to the fact that the current cooperation in the field

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