the majority of the steering committee members represent the eu institutions and in addition there are four elected members from the national central banks. two advisory committees have also been set up – the advisory technical committee, chaired by stefan ingves of the riksbank and the advisory scientific committee chaired by professor martin hellwig of the max planck institute. the advisory technical committee ( atc ) mirrors the composition of the general board with 62 members. the advisory scientific committee ( asc ) is smaller, consisting of only 15 academics and the chair of the atc. i have been a member of the esrb and the atc at its first meetings box 1 steering committee members esrb chair ( ecb president ) and first vice - chair ecb vice - president governors of 4 central banks european commission representative chairpersons of the three esas president of the efc atc chair asc chair the esrb general board held its inaugural meeting in january and has since met three times. it will meet again in december. the meetings were prepared by the secretariat, the steering committee and the advisory technical committee. the atc has also been supported by the work of several working and expert groups. the esrb ’ s work so far i hardly need to point out that the esrb started in a very difficult period when systemic risks in europe seemed to be greater than ever and when political and economic issues were tightly interconnected. obviously, the work of the esrb has largely focused on the immediate challenges of the current situation. but work is also taking place on more longterm structural challenges to the eu financial system. the vicious financial triangle at its june meeting, the esrb concluded that the most serious threat to financial stability in the eu stems from the interplay between the vulnerabilities of public finances in certain eu member states and the banking system, with potential contagion effects across the union and beyond. at the last meeting on september 21, the esrb stated that the risk to stability has increased considerably. i think we can all agree with this conclusion. over the summer, the weakening prospects for economic growth have further added to the difficulties. we now face a dangerous interplay between fragile public finances, weak banking sectors and low economic activity both at global and eu levels – the vicious financial triangle. it was right of the esrb to put this issue at the very top of its agenda, in spite of its highly political content. anything else would have bis central bankers ’ speeches seriously hurt the credibility of the

where the emphasis is on possible ways of creating a more orderly environment for restructuring external debt, on principles to guide the restructuring of banking systems in the wake of a crisis, and on handling corporate insolvency. much of this work involves international institutions like, for instance, the international monetary fund, the world bank, the bank for international settlements, the basel committee on banking supervision, and the oecd, as well as the newly created financial stability forum. governor backstrom is also chairman of the board and president of the bank for international settlements. before becoming governor of the riksbank in 1994 he was state secretary in the ministry of finance with responsibility for fiscal and financial affairs, which included the responsibility, under the minister, for the handling of the swedish banking crisis in the early 1990s. however, the work, often hard, of implementing policies and codes lies with national authorities. these measures will contribute to improved financial stability only if countries actually adopt and implement them. a crucial ingredient in achieving this is of course to involve countries, formally or informally, in the development of the policies, codes and standards. but even if that is achieved, i know from my own experience how difficult the actual implementation sometimes can be, not least for political reasons. i would also like to make the point that today ’ s favourable trends in the world economy should not lead us to conclude that the danger is over. instead, policymakers throughout the world must continue to work on forestalling new problems both because some evident threats to international financial and economic stability still remain and because there may well be vulnerabilities that are not so evident. the run up to the financial turbulence of the 1990s during the past twenty years, the financial systems in many countries have been deregulated. for the first time since the outbreak of world war one, capital can again pass more or less freely across national borders. moreover, major changes in communication and information technology have paved the way for new instruments and methods for risk management. taken as a whole, this has led to the financial system being more extensive and global today than ever before. this holds even though capital flows relative to gdp were also large at the end of the last century. the rapid financial development and internationalisation are per se a logical consequence of the production of goods and services being globalised, with a massive increase in cross - border trade. they also have to do with growing wealth in many parts of the world. this in turn has increased the need for