stefan ingves : where to next? priorities and themes for the basel committee keynote address by mr stefan ingves, governor of the sveriges riksbank and chairman of the basel committee on banking supervision to the third bcbs - fsi high - level meeting for central and eastern europe on “ strengthening financial sector supervision and current regulatory priorities ”, 12 march 2013. as prepared for delivery * * * good morning. it is my great pleasure to be with you again today. i would like to begin by extending my appreciation to the financial stability institute and the banking supervisors from central and eastern europe for their efforts in bringing us together again for another of these high - level meetings. last year, i was pleased to have been able to be a part of what was a very interesting and enjoyable meeting in warsaw hosted by our polish colleagues. i hope we can replicate the success of that event this year here in basel. i would like to take the opportunity today to reflect a little on what the basel committee has been doing since we last met. then i will outline work currently in train as well as our longerterm strategic priorities. the committee meets in this building tomorrow, and continues to have a very full agenda. indeed, the key message i would like to leave you with is that our work, although changing in nature, shows no signs of easing off. what have we done? before i discuss what ’ s left to do, let me recap what has been done over the past year. the key initiatives completed by the committee in the past year include : • reaching agreement on a package of revisions to finalise basel iii ’ s liquidity coverage ratio ( lcr ) ; • revising the core principles for effective banking supervision ; • developing a policy framework for dealing with domestic systemically important banks ; • establishing disclosure requirements for the new basel iii definition of capital ; and • updating the supervisory guidance for assessing the effectiveness of a bank ’ s internal audit function. in addition, the committee established a sound operating framework within which to assess its members ’ implementation of basel iii. as a result, the committee produced : • two regular semiannual reports on basel iii implementation in all member countries ( along with two special reports to the g20 on implementation ) ; • assessments of basel iii implementation in the european union, japan and the united states ; and • a report analysing the variability of risk - weighted asset calculations for market risk in individual banks. further down the agenda, my colleagues

the annual growth rate of loans to households ( adjusted for loan sales and securitisation ) stood at 0. 3 % in december, broadly unchanged since the beginning of 2013. the annual rate of change of loans to non - financial corporations ( adjusted for loan sales and securitisation ) was – 2. 9 % in december, after – 3. 1 % in november. the january 2014 bank lending survey provides indications of some further stabilisation in credit conditions for firms and households and a smaller net decline in loan demand by enterprises. overall, weak loan dynamics for non - financial corporations continue to reflect their lagged relationship with the business cycle, credit risk and the ongoing adjustment of financial and non - financial sector balance sheets. since the summer of 2012 substantial progress has been made in improving the funding situation of banks. in order to ensure an adequate transmission of monetary policy to the financing conditions in euro area countries, it is essential that the fragmentation of euro area credit markets declines further and that the resilience of banks is strengthened where needed. this is the objective of the ecb ’ s comprehensive assessment, while the timely implementation of additional steps to establish a banking union will further help to restore confidence in the financial system. to sum up, the economic analysis confirms our expectation of a prolonged period of low inflation, to be followed by a gradual upward movement towards inflation rates below, but close to, 2 % later on. a cross - check with the signals from the monetary analysis confirms the picture of subdued underlying price pressures in the euro area over the medium term. as regards fiscal policies, euro area countries should not unravel past consolidation efforts and should put high government debt on a downward trajectory over the medium term. fiscal strategies should be in line with the stability and growth pact and should ensure a growthfriendly composition of consolidation which combines improving the quality and efficiency of public services with minimising distortionary effects of taxation. when accompanied by the decisive implementation of structural reforms, these strategies will further support the still fragile economic recovery. governments must therefore continue with product and labour market reforms. these reforms will help to enhance the euro area ’ s growth potential and reduce the high unemployment rates in many countries. we are now at your disposal for questions. bis central bankers ’ speeches