the full exploitation of the available scope for growth and, on the other, prevents inflationary developments. here, it becomes evident that as far as the intention of the ecb is concerned, the strategy chosen is similar to that of the bundesbank. in the light of the uncertainty prevailing in the new currency area, at least at the beginning, however, the governing council of the ecb has not set an explicit monetary target, but rather confined itself to determining and releasing a somewhat less binding reference value. anyway, and as a reassurance to the politicians worried about the business cycle, this type of monetary policy has an automatic and clearly anticyclical component. looking at the eurosystem ’ s monetary policy instruments and procedures, there are also strong parallels to the instruments of the bundesbank. all in all, it is apparent that both the institutional and organisational structure of the eurosystem and the choice of the monetary policy strategy and instruments have contributed to achieving continuity in monetary policy. the stock of confidence gained by the ecb has helped to limit the prevailing fears and doubts concerning emu, especially in germany, so that today more and more residents are regarding the european central bank as a worthy successor to the bundesbank. - v - what, then, are germany ’ s expectations of the transition to a single currency in europe? much has been written and debated about the opportunities and risks of this step : the introduction of the euro is certainly more than simply exchanging one medium of payment for another. the euro will no doubt also have real economic consequences, and it constitutes a new element in the international monetary system. european monetary union eliminates exchange rate fluctuations among the currencies of the participating countries, thus doing away with a substantial element of volatility and uncertainty. costly hedging operations against exchange rate fluctuations and high exchange costs have become obsolete ; cross - border trade can expand without being held back by currency market uncertainties, therefore stimulating the real economy. large enterprises and financial institutions, in particular, are hoping that the elimination of foreign exchange rate risks and the direct price comparison of input and output factors will present new market opportunities. this home base free of monetary uncertainties presents great advantages, especially for the german economy, because more than half of all german exports go to our european neighbours. it is therefore somewhat difficult to understand why a new debate has erupted just now in the euro area on the fixing of foreign exchange rates between the large currency blocs.

in this respect. 3. both, the basel ii framework and the eu - directive, are leaving the necessary flexibility to supervisors to conduct the supervisory review process in proportion to the risk contribution of a bank to the financial system. especially for countries having a large number of small and medium sized banks this is important to promote the acceptance of the new rules. one common goal finance ministries, central banks and supervisory authorities are sharing is to enhance the stability of the financial system. the implementation of basel ii will bring us one important step further in achieving and maintaining this goal. thank you for your attention.