The actions needed to enhance market discipline and strengthen the resilience of the financial systems are currently being examined both by market participants and policy-  BIS Review 9/2008  9  makers. The recent experience has provided financial institutions and other markets participants with strong incentives to address the weaknesses revealed in various ways, including via improved transparency about exposures and greater disclosure of risks in products and processes. Financial regulators and supervisors are also examining ways to strengthen the resilience of the financial system through a robust framework that ensures adequate capital and liquidity buffers, and encourages market discipline and promotes effective risk management. At global level, the Financial Stability Forum will present a report to the G7 Ministers and Governors in April 2008 which will include recommended actions to achieve these objectives. What has been the impact of financial globalisation in the unfolding of the ongoing financial turmoil? It is a key factor that had contributed to boosting market liquidity, reducing market volatility and fostering financial development in the preceding years. Moreover, it facilitated the propagation of shocks and the spreading of sub-prime related risks to Europe, as a result of the acquisition of large exposures by European banks to structured finance products based on bank assets originating from across the Atlantic and European banks major involvement in the dollar asset-backed commercial paper (ABCP) market, where, at a certain point in time, they accounted for about 50% of the funding.

These movements can be explained by several factors: risk aversion, preference for liquidity, tightening of remuneration spreads, tax-regime uncertainty, “re-intermediation” of savings ahead of the new prudential rules (Basel III and Solvency II). I would like to emphasise just how complementary the approaches that will be presented to you in this first session can be. While the topic of savings touches upon a wide range of well-known macroeconomic issues, it is the individual decisions of households and their financial services providers that ultimately generate the fundamentals. II. Following on from this, what challenges do movements of household savings pose for the marketing of financial products? The rules framing the marketing of financial products play a fundamental role in modern economies because they contribute so much to consumer confidence, particularly when the consumer wishes to make long-term investments. In a highly complex economic environment, the advisory duty is an essential link in the chain between household satisfaction and the economic efficacy of their investments. The numerous questions concerning life-insurance received by the legal specialists on the ACP information platform bear witness to this reality. The marketing of financial products also raises questions of consumer protection. The financial services provider must take into account the client’s profile including his/her age, assets, investment horizon and degree of risk aversion, and adapt the investment opportunities offered accordingly so that the recommended investments are tailored to the client’s wishes and needs. Guaranteeing that savers receive the right information is therefore indispensable.