Debtor-in-possession financing would not be not a viable option because it simply would not likely be available in a timely manner and on the scale—potentially hundreds of billions of dollars—needed to fill the hole created when counterparties run away from a systemically important financial institution. 4/6  BIS central bankers' speeches  There is also another difficulty. In the event of a financial holding company’s bankruptcy restructuring, there are limits on the Federal Reserve’s ability to lend to subsidiaries that continue to operate. The Federal Reserve has the legal authority to lend through the discount window against a subsidiary bank’s high-quality collateral, with appropriate haircuts. But, under existing laws and regulations, the Federal Reserve cannot lend to the securities affiliates. Moreover, Section 23A of the Federal Reserve Act restricts the commercial bank subsidiary of a systemically important firm from on-lending the funds borrowed from the Fed to its broker-dealer —even if the broker-dealer has good collateral to pledge against the loan. Put simply, in today’s legal and regulatory regime, there is a large potential liquidity gap. There is not a credible liquidity backstop for a broker-dealer in bankruptcy. In contrast, Title II provides for temporary funding through the Orderly Liquidation Fund, which can support the resolution of the recapitalized entity, including the broker-dealer. This means that if one were to eliminate Title II, one should develop an alternative means to provide a temporary, comprehensive liquidity backstop to the restructured firm.

The banking groups operating in Estonia are able to manage capital and liquidity in a flexible way at group level. The integration of the banking system consists in the readiness of banking groups to promptly channel money flows to various subsidiaries and branches according to need. The integration of banking is supported by cooperation in the Nordic-Baltic region. I am convinced the daily information exchange and cooperation agreements of our region set an example of ensuring financial stability for the entire European Union. In the final months of 2008, Sweden initiated support schemes, which have had a very positive impact on banking groups as a whole, i.e., national support measures have been implemented from group level also on subsidiaries and branches. In this context, Estonia has in the EU actively supported the principle that the implementation of rescue packages must not discriminate against other Member States. 2009 economic policy priorities in Estonia Now I would like to say a few words about the current monetary and economic policy situation and the most important priorities for 2009. By now it is clear that the Estonian enterprises and households have thoroughly changed their behaviour and expectations over the past half a year. In this respect, a big part of the adjustment process has already taken place and Estonia's primary macro vulnerabilities have considerably decreased. The current account, i.e., the difference between investment and savings, has practically balanced and the financing of the economy's current expenditure is ensured by current income.