Principle III: Remittance services should be supported by a sound, predictable, non-discriminatory and proportionate legal and regulatory framework The implementation of this principle requires special laws and regulations for remittances, while the existing or new laws should be sound, predictable, non-discriminatory and proportionate. Specially, for remittance corridors, (e.g. US-Mexico, US-Brazil, the Middle East-Philippines) both sending and receiving countries should cooperate with each other to sort out legal obstacles in transferring remittances. It is also noteworthy to consider avoiding dangers of over-regulation in remittance transfers. The Money Laundering and Terrorist Financing Acts can also deter some of the cross-border money transfers. The authorities responsible for implementation of these legislation should be mindful of the need to use judgment in dealing with genuine remittances. Principle IV: Competitive market conditions, including appropriate access to domestic payment infrastructures, should be fostered in the remittance industry. This requires the avoidance of exclusivity conditions as imposed on an agent choosing to offer only one remittance service and to promote several direct /indirect access to domestic payment systems in the country. Here too, the central banks have a role to play. The central banks and supervisors should  BIS Review 3/2007  5  work with competitive authorities to ensure consistent approaches and discourage exclusivity conditions. It is also important for supervisors to ensure that money transfer systems are not unnecessarily anti-competitive. Principle V: Remittance services should be supported by appropriate governance and risk management practices Good governance and risk management practices by all stakeholders make remittance service safer and help protect consumers.

With regard to money market conditions, the ECB will remain particularly attentive to developments which may have implications for the stance of monetary policy and is ready to consider all available instruments. Further reducing fragmentation of euro area credit markets and improving confidence in the euro area banking sector are essential to ensure an adequate transmission of monetary policy to the financing conditions in the euro area countries and to further repair the credit channel. Financial stability risks have diminished in the euro area. Measures taken by European and national authorities have helped to ease the severe market stress that earlier weighed on sovereigns and banks. The euro area banking sector has made progress in balance sheet repair by improving its regulatory capital ratios, by reducing its leverage since  BIS central bankers’ speeches  1  the outbreak of the financial crisis and by shifting its funding structure towards more stable funding sources. Net inflows of capital from abroad as well as a reduction in excess liquidity conditions continue to be observed, reflecting an improvement in financial market confidence. Repayments of funds taken up in the context of the ECB’s three-year longerterm refinancing operations conducted in December 2011 and February 2012 have resulted in a decline in the size of the Eurosystem’s balance sheet since end-August 2012. We will remain attentive to all developments that influence an adequate transmission of monetary policy to the financing conditions in euro area countries.