however, this was due to many other accompanying measures, not just the separation of the currency. in other words, the currency was only as strong as the foundations of the set of economic policies in place at the time. as you all know, we tried a currency separation again in february 1993. again we had nothing to be ashamed of, as not a single drop of blood was shed in the process. savings started to spill over from slovakia into banks in the czech republic as soon as the former federation broke up. the general level of uncertainty also increased, affecting the foreign exchange market. but despite all that, the excellent organisational preparations for this step, stared secretly in the middle of the previous year, allowed the operation to be conducted quickly and efficiently. the architects of this currency separation deserve great recognition, because everything began to return to normal soon afterwards and the previous uncertainty quickly faded away. it is no secret that they were inspired primarily by rasin ’ s separation and its success, and they themselves later became a source of inspiration for currency separations in other economies gaining independence. all this tells us that the czech nation is reasonably good at running its own macroeconomic, monetary and financial affairs. it has never had to resort to an exchange rate arrangement such as a currency board, and it has enjoyed the benefits of relative economic and monetary independence. although at times the exchange rate of the koruna has been a source of domestic economic volatility, at other times it has done a great job of absorbing external shocks. until quite recently, we were also using the koruna exchange rate as an unconventional monetary policy instrument to help us achieve the inflation target. our ability to conduct our own monetary policy successfully is one reason why the czech republic is not currently seeking to adopt the euro any time soon. to sum up, the past 100 years have not been a series of random economic events. despite all the discontinuities, there has been some continuity. in the same way that we inherit various physical and personality traits from our forebears, economists learn their craft from those that came before them and pave the way for those that come after. i am sure this conference will bear me out on that. i wish you an interesting debate. thank you for listening. 2 / 2 bis central bankers'speeches

john hurley : recent issues in financial stability address by mr john hurley, governor of the central bank & financial services authority of ireland, to the institute of internal auditors, dublin, 18 april 2008. * * * introduction ladies and gentlemen, it is a pleasure to be back speaking to members of the irish district society of the institute of internal auditors on the occasion of your 20th annual conference. i would like to thank your chairman, fintan geraghty, for the invitation to speak today. a few years ago, before i became governor of the central bank and financial services authority of ireland, i had the honour to make the opening remarks on the eve of your conference. throughout my working life, i have always been conscious of the importance of the internal audit role. in my address this morning, i will comment on recent issues in financial stability, focussing on developments in international financial markets and the outlook for both international growth and the domestic economy. i will also briefly comment on the pivotal role that the auditing and accounting professions have in enhancing the resilience of financial markets. i see that the focus of this year ’ s conference is on the challenges facing the profession in delivering assurance to stakeholders on the effectiveness of risk controls in a changing and turbulent environment. the central bank and financial services authority like all major organisations, financial and other, places significant reliance on reports and opinions by external and internal auditors in relation to corporate governance and internal controls. we have established close relationships with accountancy and auditing bodies in the context of supervising regulated entities. as you know, the principles - based approach to financial regulation in this country places a lot of reliance on financial organisations to adopt and adhere to the highest standards. auditors and compliance personnel have a key role to play in this system. under financial services legislation, auditors are now required to report certain matters to the financial regulator, such as material defects in financial systems and controls or in accounting records. while the respective orientations differ, auditors, and internal auditors in particular, can provide valuable independent assurance on many other issues. i would like to turn now to the main focus of my address this morning, namely, recent issues in financial stability. what is financial stability? let me start by defining what we mean by financial stability. financial stability exists when the various parts of the financial system such as payments and settlements systems, financial markets and financial intermediaries such as banks can operate smoothly and without interruption and with each part res