The transparency of the CDS market should also be enhanced. Data warehouses, because they hold the register of all positions, are key players in that respect: whatever their location, they should provide supervisors and regulators with access to all the data they need to conduct effective macro- and micro-surveillance. With both a stronger market infrastructure and greater transparency, we will be in a good position to ensure that CDS provide a safer contribution to the financing of the economy. Most of these remarks have been focused on the major and vital impetus to enhance financial regulation. I cannot conclude without mentioning that changes in financial regulation are not a panacea for strengthening financial systems and ensuring that the new financial order will be less prone to instability. What is also absolutely critical is that macroeconomic policies do not derail financial stability. As I mentioned in my introduction, there is no free lunch in being a member of a monetary union. The credibility of policies for financial stability is contingent upon the conduct of other policies. Disciplined fiscal policy is a precondition to achieve macroeconomic and financial stability. Looking into the future, a macro-prudential policy framework could provide further rooms for maneuver. In a nutshell, macroprudential policy could alleviate some of the constraints associated with the conduct of monetary policy when faced with asset price instability. It might also alleviate the burden on fiscal policy by limiting systemic risks and thus lowering the need for state financial rescue packages.

But, the position and role of even smaller or medium size actors may also put them in a situation to have a strong influence on the system’s dynamics. There is a need to account for other dimensions of systemic importance such as interconnection, complexity, substitutability. Furthermore, the “systemic” character strongly depends on circumstances, the environment and the specific features of the financial system. Drawing up an a priori list of systemically important institutions would give a false sense of certainty. It may also fuel the moral hazard associated with such firms being perceived by markets as – exactly that – systemic. Various initiatives are currently discussed, including stronger cooperation between supervisors and, more controversially, additional capital charges. They certainly require further thorough analysis It is essential to avoid threshold effects and never forget that risks are continuous in nature, time-varying and state-contingent. The debate about systemic firms echoes also concerns about the activities and business models of some institutions. It is especially so in countries where public intervention to rescue the financial system was on a massive scale. The presumption is that smaller and leaner financial institutions would pose less risk to financial and macroeconomic stability than larger and more diversified ones. Yet, facts suggest this cannot hold as a general lesson from the crisis. Indeed, those banks which suffered most from the crisis were precisely those which were more specialized, such as the investment banks. By contrast, large universal banks, reliant on a large deposit base, could withstand the shocks comparatively better.