Directive 2009/111/EC of The European Parliament And Of The Council of 16 September 2009 amending Directives 2006/48/EC, 2006/49/EC and 2007/64/EC as regards banks affiliated to central institutions, certain own funds items, large exposures, supervisory arrangements, and crisis management. OJ, L 302, 17.11.2009, p. 97. 8. European Commission Public Consultation regarding further possible changes to the Capital Requirements Directive (“CRD”). The consultation was closed on 4 September 2009. 9. European Commission Public Consultation regarding further possible changes to the Capital Requirements Directive (“CRD”) – launched on 26 February 2010. 10. European Commission Public Consultation regarding an EU framework for CrossBorder Crisis Management in the Banking Sector. 11. Lorenzo Bini Smaghi, Member of the Executive Board of the European Central Bank, Has the financial sector grown too big? 2010. 12. Lucas Papademos, European Central Bank Vice President, “Financial Integration, development and stability: Lessons from the crisis”, speech delivered on 12 April 2010 at the conference on “Financial integration and stability: the legacy of the crisis”. 13. Jean-Claude Trichet, European Central Bank President, ceremonial address at “100 years of Confindustria” delivered at Parma, Italy on 10 April 2010. 14. Lorenzo Bini Smaghi, Member of the Executive Board of the European Central Bank, “Monetary Policy: Recent experiences and future directions”, speech delivered at the Bank of Canada, Toronto, 9 April 2010. 15. Group of Twenty “Declaration of the Global Plan for Recovery and Reform”, London, 2 April 2009. 16. Group of Twenty “Declaration on Strengthening the Financial System”, London, 2 April 2009. 17.

At the same time, we must ensure that banks, especially the larger ones, go back to their core business of extending credit to the real economy and refrain from engaging in the kind of risk-taking that gave rise to the recent crisis. Priority must, therefore, be given to the one measure that is most likely to influence the banks’ ability to take risk, that is the BCBS proposals on bank capital. Capital buffers must henceforth be commensurate with the degree of risk undertaken. It is no longer acceptable that profits are privatised and losses socialised. In a broader context, another important challenge is to ensure that systemic risks are addressed without unduly constraining financial innovation and integration. Finally, the opportunity provided by the current period of reflection should also be used to examine the possible consequences of some of the reform proposals for the functioning of financial markets and for the implementation of monetary policy, and by extension also for the real economy. References 1. European Central Bank, The Incentive Structure Of The “Originate And Distribute” Model, 2008. 2. Francis Boyer Lecture of The American Enterprise Institute for Public Policy Research, “The Challenge of Central Banking in a Democratic Society”, 1996. 3.  http://www.reuters.com/article/idUSN0132320120071003  4. The High-Level Group on Financial Supervision in the EU, 2009. BIS Review 67/2010  3  5. Basel Committee on Banking Supervision, “Strengthening the resilience of the banking sector”, 2009. 6. Basel Committee on Banking Supervision, “International framework for liquidity risk measurement, standards and monitoring”, 2009. 7.