The interest of the ECB in this process therefore relates especially to the independent status of central banks of the accession countries and to the implementation of sound legal regimes in the area of financial law. At a later point in time before an accession country adopts the euro, further legislative amendments will be required in order to integrate the central bank into the Eurosystem and to enable it to fulfil its part in our monetary policy and other operations. So, what has been achieved in terms of legislative amendments in accession countries and what remains to be done before accession? The ECB co-operates with the legal experts of the national central banks of the accession countries in order to follow the legislative developments, and I can therefore give some indications of the degree of progress. Turning first to the requirement of central bank independence, several accession countries have amended their central bank legislation, although further adjustments are generally required. The drafters of the Treaty placed a strong emphasis on central bank independence as a reflection of the generally held view that the achievement of price stability is best served by an independent institution with a precise mandate. In line with this Treaty principle, the precursor of the ECB, the European Monetary Institute, established a list of features of central bank independence, which will form the basis for the assessment of the compliance of the accession countries with the requirement of central bank independence.

Therefore, as infrastructures are becoming increasingly interlinked, more coordination in the implementation of the default rules is vital for further mitigating risks at the systemic level. Finally, the default of Lehman Brothers was a major showcase for the severe implications of “institution-based interdependencies” between two or more infrastructures resulting from the exposures of major financial institutions participating in each of these infrastructures. Therefore, it is crucial for us to continue closely monitoring the interdependencies between individual institutions in order to assess their impact on the stability of the infrastructure. Infrastructures for OTC derivatives Let me now turn to the need to strengthen the infrastructure for OTC derivatives. OTC derivative markets have been very dynamic with a veritable explosion in outstanding contract volumes primarily over the past decade. The basic problem, however, is that this very dynamic evolution of OTC derivatives markets has outstripped development of the underlying clearing and settlement arrangements. Indeed, as the post-trading of OTC derivatives remained predominantly bilateral and non-standardised, the respective arrangements have become increasingly inadequate for coping with the growing volumes and complexity of OTC derivatives trades. This was highlighted in particular during the financial market turmoil, when higher trading activity and market volatility further aggravated the existing tensions. [The resulting processing backlogs and uncertainties about counterparty risk raised strong concerns among policymakers, as highlighted in the Financial Stability Forum’s April 2008 report 1 on the lessons from the financial turmoil.]