Let me address them in turn. The accounting treatment in many jurisdictions allowed such instruments to be reported offbalance sheet. Furthermore, different valuation methods were used to estimate the risks attached to these transactions. Hence, information was either completely unavailable or incomplete and, even if available, it could not be compared across the sector and jurisdictions owing to different accounting assumptions and valuation methods. It was thus of little value to regulators and supervisors. In addition, financial innovation and strategies that were intended to limit risk – especially securitisation and insurance through derivative products – dramatically increased the complexity of the financial system. Unlike organised markets, such as stock exchanges, which were tightly regulated to protect against market abuse, insider trading, and other transgressions, and were required to disclose information on prices and orders, over-the-counter markets were not. At the height of the crisis, neither market players nor public authorities could monitor the market for corporate credit-default swaps. Hence market participants were unable to evaluate the counterparty risk appropriately. Risk mitigation failed, which ultimately resulted in a drying-up of the whole market. Since that time, many jurisdictions have implemented regulatory frameworks ensuring that counterparties report OTC derivatives trades to trade repositories. In Europe, all derivatives contracts, not only OTC derivatives, are subject to this reporting obligation. In the United States, the reporting and public dissemination of publicly reportable swap transactions in all asset classes is already effective.

It is thus an important responsibility of a central bank to ensure that relevant new insights from academic research find their way into the actual conduct of monetary policy. The Eurosystem attempts to cope with this responsibility by fostering a constant intellectual exchange with the research community. The ECB organises great many seminars, conferences and workshops where the most recent research findings can be discussed, and invites leading scholars to visit and conduct research in the ECB, for example by means of the Wim Duisenberg Fellowship. Moreover, the ECB supports promising young researchers by funding five Lamfalussy Fellowships each year. The aim is to promote policy-relevant research that meets the highest academic standards. The ECB also leads and co-ordinates research efforts through Eurosystem research networks to obtain research output which is necessary for ECB decision-making but which is as of yet unavailable at universities or other research institutes. I will come back to activities of one such research network at the end of my remarks. Research by Nicholas Bloom analysing the effects of uncertainty shocks on the economy is a prime example of a policy-relevant research output. Published in Econometrica in 2009, it could not be more timely.1 The unprecedented level of uncertainty has been one of the key distinguishing features of the Great Recession. Economic uncertainty refers to an environment in which little or nothing is known about the future state of the economy.