At the same time, it is crucial to carefully assess the macro-economic impact of the measures. In this context, the outcome of the quantitative impact assessment that is currently being conducted needs to be awaited before taking any final decisions. Inappropriate calibration of the measures may impact on the provision of credit to the real economy. This is particularly relevant for the EU financial system which is more bankdependent and where the substitutability between market finance and bank finance is more limited when compared to, for example, the US. The main challenge consists in ensuring a more resilient and stable financial system that neither compromises economic recovery nor unduly impinges on financial innovation. Second, we need to ensure that we effectively capture all systemically important financial institutions, products, markets and infrastructures within the scope of regulation. One of the lessons from the crisis was the need to make the shadow banking sector more transparent. This becomes more urgent as we tighten the regulatory net for the banking sector. Otherwise we may simply shift risks to unregulated or more loosely regulated entities. In this respect let me mention the OTC derivative markets. These markets should be subject to greater transparency by promoting the reporting of non-centralised trades to trade repositories. Additionally, we should promote the clearing of eligible OTC derivatives transactions through central counterparties, which should be themselves subject to high prudential and operational standards. Finally, we need to effectively address the risks posed by systemically important financial institutions.

Gertrude Tumpel-Gugerell: Elements for intervention on accounting issues Speaking notes by Ms Gertrude Tumpel-Gugerell, Member of the Executive Board of the European Central Bank, at the colloquium “La juste valeur dans tous ses Etats”, organised by the Académie des Sciences et Techniques Comptables et Financières, Paris, 27 April 2010. *  *  *  Which are the issues related to the fair value for companies? Fair value is an appropriate measurement for certain financial instruments, notably those that are held for trading (i.e. business model is to generate profits by buying/selling in the short term) and for which reliable market prices are readily available, as well as for derivatives. Indeed, given that many derivative contracts have a zero cost at inception, fair value accounting is crucial as it recognises the potential leveraged exposure on the balance sheet. Fair value accounting mainly raises two issues: first, when to apply fair value measurement (conceptual considerations) and second, how to apply fair value measurement (operational challenges). First, in our view fair value accounting does not provide decision-useful information to investors if the intention of an entity is to hold the assets until maturity or to settle the liabilities at their nominal amount at maturity. In these cases, recognising interim fair value changes simply heightens the volatility of the financial accounts, without providing actual “information content”. This is typically the case for the loan book of commercial banks.