. in a fluid environment where financial system conditions may unexpectedly change, prudence is of the essence both for policymakers and financial institutions. concerning the role of financial institutions and supervisory authorities in coping with the financial turmoil, i would submit three observations. first, given the underlying factors of the financial stress, and in order to re - establish confidence within the financial system, it is crucial to promote a widespread consistent valuation of complex structured products as well as an adequate disclosure by banks of all their exposures, in particular related to the us subprime mortgage sector. second, i would welcome the efforts of the supervisory community, namely through the basel committee on banking supervision and the committee of european banking supervisors, in keeping each other abreast of developments and in considering jointly possible measures to contain the potential effects of the turmoil. third, i would underline the importance in stress situations, like the current one, of effective and smooth cooperation and exchange of information between the supervisory authorities and central banks. as to the policy lessons to be learned in order to avoid the recurrence of similar disruptions in the future, i would say that, while it is still too early to draw definitive conclusions, there is a common understanding on the key issues requiring further analysis. in this respect, let me recall a few topics. first, the need for the financial industry to provide significantly more public information about securitisation, credit risk transfer and complex structured products. transparency appears to be of the essence in order to restore trust and confidence. second, the need for rating agencies to review their methodologies for complex structured products and to address very seriously potential conflicts of interest. third, the need for investors to review their investment behaviour excessively reliant on ratings. fourth, the need for supervisors to implement the new capital framework under basel ii as rapidly and effectively as possible and to reflect on possible improvements of the framework, including the enhancements of the supervisory regime for liquidity risk. in this context, i should mention that the ecb with the assistance of the banking supervision committee is carrying out work on banks ’ stress - testing and contingency funding plans. on all the issues mentioned above, work is already under way at both the international and european level. the ecb is strongly supportive of the work of the financial stability forum, as well as of the european initiatives discussed in the ecofin council. in this context, i would like to once again stress the importance of effective cooperation in any policy actions to

benoit cœure : exchange of views on the ecb ’ s role in the troika remarks by mr benoit cœure, member of the executive board of the ecb, before the economic and monetary affairs committee, brussels, 13 february 2014. * * * madam chair, honourable members, let me first of all thank you for your invitation to this exchange of views. the adjustment programmes implemented in recent years in several euro area member states were an unprecedented answer to an unprecedented crisis. this crisis has affected the lives of millions of eu citizens – hence it is only natural that you, as their directly elected representatives, assess what has happened. this crisis has revealed major shortcomings, mainly in domestic economic policies, but also in the architecture of emu – thus the european parliament as an institution with a truly european perspective is an appropriate forum to discuss what can be learnt from this experience. it is against this background that i am grateful for the opportunity today to explain the role of the ecb in the troika, to discuss our assessment of the adjustment process in the programme countries and to draw with you some key lessons from the last four years. the ecb ’ s role in the troika let me start by recalling the circumstances under which the troika was set up. when a sovereign debt crisis erupted in spring 2010 in the aftermath of an unprecedented global financial crisis, the euro area was caught unprepared. the maastricht architecture had failed to prevent the build - up of excessive imbalances and unsustainable fiscal positions by a number of countries. europe was then ill - equipped to handle a crisis of such magnitude stemming from these developments. there was no framework for dealing with member states losing market access. there was no governance foreseen for such cases. there was no instrument to provide funding. under these difficult circumstances, the member states decided to grant financial assistance subject to appropriate conditionality as part of an adjustment programme. the eurogroup sought to avail itself of the best available expertise to support it in designing and reviewing these programmes. the imf and the european commission in liaison with the ecb with their complementary experience in crisis management, country surveillance and financial stability were asked to take on this difficult task – this is what we know today as the troika. the particular expertise and euro area focus of the ecb, in other words, the views we have on the systemic consequences of the decisions under discussion, were compelling reasons for