Differences in reporting requirements can be seen as a barrier to achieving the full potential of this “single” market, to the extent that they impose an additional cost on those entities operating, or planning to operate, across borders. Not surprisingly, therefore, there have been a number of calls for regulators to work together to streamline the reporting requirements that apply to institutions which are active on a pan-European basis. The Committee of European Banking Supervisors, or “CEBS”, established two years ago and charged with promoting convergence of supervisory practices and cooperation and information sharing between supervisors, has risen to this challenge and has taken a major initiative in this respect, culminating in the publication of two sets of common reporting templates, one set for institutions to report their solvency ratio results under Basel II, and the other set for institutions to report financial information based on IFRS. These two projects take advantage of the two initiatives for convergence in international regulatory requirements I have already mentioned. Indeed, it would have been very difficult, if not impossible, to have made progress without them. Both the introduction of International Financial Reporting Standards and the implementation of Basel II are obliging supervisors to modify their existing reporting requirements and systems. This presents a window of opportunity to make progress on more convergent approaches. The benefits of a common reporting framework are clear, both for the institutions generating the information and for banking supervisors. From the standpoint of financial institutions, administrative costs will decrease, particularly for cross-border banks.

At such a meeting, Malta's method of participation in ERM II, including the central parity rate, would be agreed. The way would then be open to join the mechanism. ERM II is characterised by a standard fluctuation band of +/- 15 per cent per cent. How relevant do you expect such a band to be for Malta? The system allows so much flexibility to ease the burden of transformation and structural reforms in those Member States which still have a relatively long way to go before they reach average EU levels of development and whose exchange rate may not yet, therefore, have reached an equilibrium level. The standard band represents the maximum exchange rate flexibility that can be availed of, depending on individual country circumstances. The existence of the bands should not, therefore, give rise to the expectation that the exchange rate will automatically fluctuate to this extent. In the case of Malta, for example, the economy has already achieved a relatively high level of real and nominal convergence and one would, therefore, expect that the daily rate should remain close to the central parity rate. Indeed, given the crucial role that exchange rate stability plays in the highly open Maltese economy, and the significant credibility attained by the Maltese lira under the existing basket peg, the authorities would like to preserve the important positive effects of the current arrangement, namely exchange rate stability, during ERM II. Will participation in ERM II entail a change in the level of the lira/euro exchange rate?