as so - called “ shadow banking ”. contagion is most likely to occur when information is not equally available to all parties. opacity and a lack of information about exposures were endemic to otc derivative markets during the crisis, making these markets an important locus of contagion. following the postcrisis reforms, derivative markets have functioned more effectively. regulatory mandates and supervisory incentives are resulting in a larger share of derivatives transactions being cleared through central counterparties and more are being collateralised and are therefore safer. policymakers also have more visibility about financial market infrastructures now that they play a more central role in financial markets. there are, though, some informationsharing issues in this area that still need to be worked out. bis central bankers ’ speeches one other outstanding issue is how the multiplicity of indicators of systemic risk can inform policymaking, and how one might use the signal provided by an indicator to develop a particular policy response. this is no easy task. the insights of research such as the work presented at this conference will certainly be welcome. conclusion : the role of supervision in all three areas i have spoken about – namely, resilience, the financial cycle and systemic risk – it is easy to focus mainly on the regulatory initiatives. regulation can be printed, measured and enforced. but history teaches that regulation cannot solve all problems. the financial system evolves, so no set of rules can deal with all risks and problems. this is an important reason why there needs to be a parallel focus on strong and effective supervision. my view is that a strengthening of supervision is at least as important as are the post - crisis regulatory reforms. rigorous, inquiring supervision that takes a holistic view of the environment is essential to maintaining financial stability and good outcomes for consumers. i encourage you to consider how the research agenda can be expanded to consider how to best balance regulation and supervision. thank you for your attention. i wish you the best as you grapple with this difficult set of issues over the next couple of days. bis central bankers ’ speeches

crisis a year ago marked a significant turning point in the economic policy stance. since then, government and parliament have adopted an ambitious raft of measures, with the drastic reduction in structural public spending being particularly notable. this has involved unpopular measures such as reducing the wages of public sector employees, freezing all pensions except for the minimum ones and sharply reducing public investment, as well as the recent agreement to improve the sustainability of our public pension system. in relation to the banking sector, the government and parliament initiated the reform process a year before the markets began to show signs of concern with the explosion of the sovereign debt crisis. far - reaching measures were taken that enabled the principal problems of the sector to be tackled before they became intractable. the main task undertaken to tackle the structural problems in our banking system has undoubtedly been the restructuring of the savings bank sector. part of this sector had built up significant imbalances during the expansionary years. this, along with the duration and depth of the international economic crisis, made evident the need to create an instrument with considerable financial capacity and sufficient powers to carry out extensive restructuring of the savings bank sector. for this purpose, at the beginning of the summer of 2009 the royal decree - law on the creation of the fund for the orderly restructuring of the banking sector ( the frob ) was approved, which would be ratified by parliament one month later. since then, the restructuring of the sector, partly achieved with the assistance of frob funds, has been of an extraordinary intensity. in less than two years, the 45 savings banks previously in place have been reduced to a third of that number, and the consolidation process has affected more than 95 % of the total assets of the sector. the objectives of this restructuring and integration process were very clear. first, to correct the excessive fragmentation of the sector. indeed, the average size of the resulting institutions is two and a half times larger, which boosts their competitiveness and facilitates the raising of external funding. second, to reduce the excess capacity in their branch networks and central services. the adjustment envisaged in the restructuring plans would involve a reduction of 10 to 25 % in the number of branches and 12 to 18 % in the number of employees. these cuts are in addition to those which had already been made previously, of 5 % in branches and 4 % in staff from their peak levels in 2008. however the ultimate objective of the integration processes was to strengthen the viability of the resulting institutions with the funds and management capacity of