At EU level, the forthcoming ESCB-CESR recommendations for central counterparties have already been revised to include specific guidance on their application to CCPs for OTC derivatives. It is now also crucial to achieve such a common understanding at the global level as well. In this respect, we look forward to the recently initiated joint efforts of the CPSS and IOSCO to review the CPSS-IOSCO recommendations for central counterparties issued in 2004. Finally, I wish to reiterate that the introduction of CCPs will not be a panacea for addressing all concerns regarding the resilience and efficiency of OTC derivatives markets. For instance, we will need complementary action to ensure better risk management and transparency as well for those products that are not yet sufficiently standardised to be eligible for central clearing. Furthermore, sound post-trading needs to be complemented by enhanced trading, pre-clearing and lifecycle management of OTC derivatives, e.g. via the greater use of automated trading and confirmation, portfolio compression, the registration of all trades in central data depositories, as well as enhanced risk management and disclosure requirements for the financial institutions involved in OTC derivatives trading. Towards more efficient and resilient retail infrastructures for the euro area Let me finally come to the third issue we need to focus on beyond the current turmoil: the vital role of retail infrastructures in terms of financial stability. The retail business facilitates the bulk of payments related to the day-to-day lives and financial activities of both individuals and companies.

This reflects the strong increase in overnight deposits made by banks with national central banks as a consequence of the switch to the full allotment fixed rate tenders in the ECB’s open market operations, following the intensification of the crisis after the collapse of Lehman Brothers in September 2008. Second, not surprisingly from September 2008 onwards, we see a remarkable increase in the number of sender limits along with a decrease in their value (see Chart 2). Nonetheless, these changes had a marginal impact on the smooth flow of transactions and did not cause delays to the timely submission of payments. Third, the level of non-settled payments remained fairly stable in the second half of 2008, amounting to just 1% or so of the total daily average value settled in the system (see Chart 3), indicating the overall resilience of the TARGET system in the face of the financial turmoil. Crucially, market infrastructures continued to function robustly. In particular, by providing stable networks despite the highly disruptive conditions in financial markets, market infrastructures played an important shock-absorbing role and helped to maintain overall public confidence in the financial system. Since central banking overseers and financial regulators recognised long ago the critical importance of the reliable functioning of market infrastructures for overall financial stability and efficiency, they took action together with the service providers. Stringent requirements ensure that EU infrastructures are adequately designed, effectively manage their risks, and operate efficiently and reliably, both under normal circumstances and at times of crisis.