encouraged excessive leverage and risk taking and excessive concentration of exposures among major financial institutions ”. the insistence on the words “ insufficient ”, “ inadequate ” and “ excessive ” shows that, in particular, more and better buffers are expected. the crisis has given rise to a unique momentum for profound reform of the financial sector. we should not let this momentum slip away. i know full well that the return to more simplicity will be anything but simple. of course, i realise that a lot of technical issues have still to be resolved. and i admit that it will be important to introduce the new regulations in a timely manner so as not to repress the smooth flow of credit which will be required to support the nascent recovery. in fact, while there is much discussion at the moment on the design of the exit strategy from the public support measures, we should be equally aware of the need for an entry strategy for moving over to more comprehensive regulatory requirements. but all these considerations should not be an excuse for prevarication and delaying the essential decisions to take for the design of a more comprehensive framework. the crisis has seriously dented belief in the ability of the markets to regulate themselves. while it would be illusory to dispense with the assistance of the market in designing new supervisory and regulatory arrangements, these market consultations have more often that not been used by many financial institutions as a channel to lobby for softer regulation, certainly in the past and probably still today. the rapid spread of the financial crisis has also served as a lesson for supervisors. it has shown that the root of the problems was not linked to any specific difficulties faced by individual institutions but, rather, to the gradual build - up of common risks within the system. it is now widely acknowledged that such crystallisation of risk, linked to major shifts in the correlation between financial products and markets, requires more systemically - focused oversight and regulation. to use the professional jargon, micro - prudential control, the preserve of the supervisory authorities, must be complemented by macro - prudential oversight, resorting to the expertise of central banks. to improve the symbiosis between these two approaches, a growing number of countries are adopting the so - called “ twin peaks model ” where the central bank is in charge of the full range of prudential supervision, in both its micro - and macro dimension, leaving the oversight of market integrity and investor protection to a separate institution. just a few weeks ago,

market that it is able to influence. it should be very clear that these two responsibilities should not be confused. however in fulfilling these two responsibilities, they reinforce each other, to the benefit of both macroeconomic and financial stability. in order to restore orderly conditions on the money markets, the eurosystem injected liquidity over and above what is needed by the banking system under normal circumstances, through regular mro allotments, ad hoc fine - tuning operations and supplementary longer - term refinancing operations ( ltros ). these injections allowed banks to front - load the fulfilment of their reserve requirements and eased the tensions on the overnight interbank market. the eurosystem also absorbed excess reserves when needed to avoid downward pressure on overnight rates. while the eurosystem's liquidity - providing and absorbing operations had a stabilising effect on euro money markets at the shortest end, market liquidity remains thin and activity limited in the unsecured interbank market. recently, the ecb clearly communicated to the markets that it will reinforce its policy of allocating sufficient liquidity to accommodate the demand of counterparties to meet reserve requirements early within the maintenance period. this policy will be followed as long as necessary. however, the restoration of normal conditions over the whole maturity spectrum depends mainly on the return of confidence and trust by market participants, both in the other participants and in their own ability to access funding in sufficient amounts. it must be emphasised that the eurosystem conducted these operations through standard market - compliant procedures and without changing the overall stance of monetary policy. let me now turn to an assessment of the monetary policy stance at the current juncture. the primary mandate of the eurosystem is to deliver price stability in the medium term. on the basis of a thorough economic and monetary analysis and by acting in a firm and timely manner, the governing council of the ecb has to ensure that medium - and long - term inflation expectations remain firmly anchored in line with price stability, thereby favouring an environment conducive to sustained economic growth and well - functioning markets. the rise of many commodities prices – in particular oil –, the dynamism of monetary developments and the emergence of capacity constraints, implied upside risks to price stability over the medium term. this led us to issue in the summer a new message of " strong vigilance ". however, since then, the ecb governing council, which is never pre - commited, has not changed