And, as U.S. Attorney for the Southern District of New York Preet Bharara has observed, if you spend your time thinking about how close to the line you can get, it is inevitable that you will at some point cross that line. No one gets the arbitrage right 100 percent of the time.2 When you make that mistake, you will not only have a bad culture, but you will also have to deal with Preet Bharara’s office. 2/6  BIS central bankers' speeches  Therefore, what’s needed is a better culture. Culture can help to fill in the spaces between and beyond rules. Culture also shapes our attitude toward rules. A strong, ethical culture is one in which individuals within an organization demonstrate to each other a commitment to certain first principles. These principles must align with both the private purpose of the organization and the public rules governing its operations. Of course, it is possible for principles to conflict. When that occurs, determining the right course will be difficult. But, the more you wrestle with that conflict, the better you will become at resolving ethical quandaries. Aristotle called this aspect of ethics “habit,” but I prefer to think of it as ethical muscle memory. The more practice you have in thinking about it, the better you will be at determining what is right. Bankers will be more likely to think about what is right, as opposed to what is merely legal, the more often they observe their colleagues doing the same.
3  European Union enlargement  At first glance, the link between this topic and the two issues I have been dealing with up to now appears quite tenuous. Yet, while the issues arising from market integration and financial stability are of concern for many Central Banks, managing the EU enlargement is a distinctive concern of the Eurosystem. I would like to share views on how the Eurosystem will act to address this concern, while performing their task regarding price and financial stability. Ten countries from Central, Eastern and Southern Europe –comprising 75 million inhabitants – are to join the EU, thus completing European reunification. Although their combined GDP is rather small (equivalent to that of the Netherlands for instance), in terms of population' size they will propel the EU (450 millions inhabitants) largely ahead of the combined population of both the US (population: 275 millions) and Russia (population: 145 millions). This testifies again, if need be, to the attractiveness of the European Union framework, which has provided us with economic prosperity and political stability for almost half a century. Accession countries have accomplished important progress in stabilizing and strengthening their economies and their institutions. Observing the accession countries, recent history shows the major improvements those countries have made, in hardly 10 years, on the road towards convergence with the EU. Let us keep in mind, the sometimes rather slow pace the current Member States took, regarding for example trade openness, price liberalisation, or macro economic discipline.