, where credit risks are often passed from the originators of bank loans to a wide range of investors, instead of remaining on the books of the originating banks. indeed, the basel ii framework was conceived to support banks in the implementation of advanced risk management standards with the overall aim of improving the stability and soundness of the financial system in all the economies around the world. within the european union, we have gathered extensive experience with the implementation of basel ii which we are happy to share. as part of this cooperation programme, experts on banking supervision from the eurosystem will travel to moscow and support the bank of russia ’ s internal work on implementing basel ii. with regard to the internal audit component of the cooperation programme, the eurosystem will offer its expertise and advice on risk - based internal audit methods and best practices. the objective of this cooperation with the bank of russia is to enhance the capacity of the chief auditor ’ s service to carry out risk - based internal audits. in today ’ s world, central banks also need modern and sophisticated internal audit procedures. risk - based internal audits provide, on the basis of a risk analysis, assurance on the proper functioning of central bank activities, especially on those aspects where the risks are highest, rather than performing a less differentiated, simple compliance audit. such a risk - based approach represents, in our view, the appropriate response to the challenges faced by the internal audit services and we are pleased to share our experience in this field. during this part of the project, eurosystem experts will train about 350 bank of russia experts on internal audit. in the implementation of this cooperation programme, we will employ a coordinated “ eurosystem approach ” which involves the ecb and a number of national central banks of the euro area. this formula, which was conceived for the first eurosystem cooperation programme with the bank of russia on banking supervision, was successfully implemented between 2003 and 2005. over the coming 33 months, the ecb and the national central banks that i mentioned earlier will be working closely with the bank of russia on the programme. the project will be coordinated by a team consisting of ms gulsana barpiyeva, from the deutsche bundesbank, who will be the eurosystem project coordinator in moscow, mr christian fehlker, the eurosystem team leader for banking supervision, and mr lukasz kubicki, the eurosystem team leader for internal audit. the project will be managed by an ecb team

run ”, would most likely provide more resilience in a crisis than integration through interbank lending and fixed income investment. new research shows that the vulnerability of the euro area to a “ sudden stop ” worsened the crisis by further constraining the fiscal reaction of governments during the downturn. 14 while such options to increase equity funding are being developed, a strategy that can improve debt dynamics for all firms ’ is to raise “ implied equity ” – the outlook for future income. if firms expect higher income, it improves their debt - to - income ratios and debt service capacity, which in turn creates space for new investment. 15 in this sense, raising both the level and trend of potential growth is an integral part of recapitalising european firms, and indeed of the economy as whole. for more information see article on “ deleveraging patterns in the euro area corporate sector ”, ecb monthly bulletin, february 2014. see opinion piece by benoit cœure and jorg asmussen, “ a three - pillar - strategy for the euro ”, published in berliner zeitung and les echos, 19 september 2014. martin, philippe and thomas philippon ( 2014 ), “ inspecting the mechanism : leverage and the great recession in the eurozone ”, forthcoming. the concept of “ implied equity ” echoes in an investment context what holmstrom and tirole have called “ inside liquidity ”, i. e. future income streams that the private sector can pledge to react to a liquidity shock. raising implied equity has therefore the additional benefit of making the economic system more resilient to shocks, i. e. it has stabilising as well as allocative properties. see holmstrom, bengt and jean tirole ( 2010 ), inside and outside liquidity, mit press. bis central bankers ’ speeches we face however a circular problem in the euro area : we need higher potential growth to work through the debt overhang so that firms can being investing again ; but that investment is itself necessary to raise potential growth. and this circle is potentially vicious : if low potential growth leads to lower investment, then it further lowers potential growth. a policy mix to lift investment demand this is where the next part of a comprehensive approach comes in : getting the policy mix right on the supply side of the economy to lift investment demand. in a basic solow growth model, investment grows at the growth rate of productivity plus the growth rate of hours worked along the steady state path