With increased international mobility of talent, the global war for talent will intensify. Successful financial institutions will be those that are able to develop, attract and  BIS Review 146/2010  7  retain talent. Financial services professionals also need to be regionally oriented and able to integrate cross-border businesses effectively. The blueprint will also address this issue to ensure that the sector will be well supported. In charting the future for the industry, the foundation for financial stability will be strengthened. The focus will be on addressing systemic risks and strengthening crisis management capability. Regulatory cooperation will be enhanced in surveillance and in capacity building for effective cross border resolution of problem institutions. Domestically, significant supervisory attention will be directed towards achieving regulatory consistency in respect to risk assessment for financial groups taking into account the trade-offs and the need for safeguards. Underpinning the more competitive and dynamic financial sector will also be a deep-seated core value system, with financial service providers operating responsibly, with integrity and offering financial products and services with dignity. More specific institutional arrangements will be considered for market conduct and consumer protection. In realizing this shared vision for the financial sector, of critical importance is the cumulative participation of the public sector and the industry in the development of the Plan and its implementation. This combined effort will ensure that the new blueprint is comprehensive, relevant and realistic.

It may prevent negative feedback loops emerging via the public sector, but to prevent also their emergence in the financial sector – as we have seen in the Irish case – a broader remit for governance is needed. Imbalances in the euro area would not have developed in the same scale if the behaviour of the banking sectors in all countries, in core and peripheral countries, had been better supervised. Some banking sectors distributed too much credit and others provided a  1  Bolton, P., and O. Jeanne, “Sovereign default risk and bank fragility in financially integrated economies”, CEPR Discussion Paper No. 8358  2  BIS central bankers’ speeches  significant part of the funding that then dried-out when the crisis came and the credit risk was suddenly reassessed. All this implies necessarily that effective economic governance needs also to address the financial sector, in order that imbalances, externalities and spillovers are tackled effectively. Conceptually, financial supervision needs to be exercised as much as possible at the European level. It cannot be left, as presently, in the domain of exclusive national competences. The components of financial stability governance in the euro area Accordingly, let me now propose what are, in my view, the key components to achieve reinforced governance in the euro area for financial stability. First: macro-prudential risk monitoring and assessment The first component is enhancing the capacity of public authorities to identify and address systemic risk at the European level, both from an analytical and an institutional perspective.