From a macro point of view, credit risk derivatives are helping diversify and spread risk, under the assumption that buyers of risk will deliberately alter their own risk-return profile. But the ultimate risk remain and as a result, some sectors, such as insurance companies or pensions funds, which hitherto did not feel the direct pressure of a worsening in credit quality, may now find themselves directly impacted, had they sold such derivatives at an earlier stage. Against this background, and beyond the primary objective of achieving price stability over the medium-term, which part should central banks play to improve the functioning of financial markets and promote financial stability? Apart from their operational tasks - such as the management of money market liquidity and the monitoring of large value payment systems - central banks must endeavour unremittingly to create the conditions for the international economy to minimize misalignments in asset prices, excessive volatility, purely speculative phenomena and dangerous herding behaviour. This is the underlying message in central banks' repeated calls for prudence and caution. I would like now to address my third point, that is, the prospects of the European Union enlargement. 3. European Union enlargement  At first glance, the link between this topic and the two issues I have been dealing with up to now appears quite tenuous. Yet, while the issues arising from market integration and financial stability are of concern for many Central Banks, managing the EU enlargement is a distinctive concern of the Eurosystem.

In all the European Union countries, Regulation and Supervision is undergoing major changes, and integrated supervision is a hallmark of the new reform. At the European Union level, reforms have led to the setting up of the European Systemic Risk Board and three European Authorities (European Banking Authority, European Securities and Markets Authorities, European Insurance and Occupational Pensions Authority). They work together in scrutinizing risks and formulating policies for dealing with systemic threats. The National Committee for Financial Stability has the task of overseeing the overall financial system. Therefore, the mission of adopting an integrated approach to examining risks is in its genes. The National Bank of Romania has a history of thinking “globally” about the Romanian financial system, which is of enormous help for the National Committee for Financial Stability. The Financial Supervision Authority itself has to develop its conceptual and operational arms in this regard. The very organizational map of the Financial Supervision Authority shows the attention granted to integrated supervision. Thus, a directorate for financial integration is a novelty and has a prominent role to play. It is commendable that its staffing has tried to bring in highly experienced individuals. But, however experienced these people are, there is a lot they need to understand better in order to fulfil their mission. For the sake of fairness, it should be said, that integrated supervision is at the beginning in many European Union member states. And even where it has a longer history, its performance is not stellar.