ensure the consistency, credibility, legal certainty and political legitimacy of the eu framework for financial stability. it is vital that the overall effectiveness and efficiency of the eu institutional arrangements are not endangered and that no concerns arise from a financial stability perspective. therefore, the ecb favours an evolutionary, rather than a revolutionary, approach to the further development of the eu framework for banking supervision. nevertheless, if the existing arrangements prove in practice to be insufficiently effective in addressing the challenges associated with the changing financial landscape, consideration should be given to new ideas that would help us to develop the eu supervisory framework further. 2 / 2

on the one hand, cross - border banking broadens and deepens banking markets, increases liquidity and risk sharing and thus strengthens the overall resilience of the european financial system. on the other hand, national financial systems may be increasingly exposed to common risks, and financial disturbances may be transmitted more easily across borders. against this background, it is essential to ensure that the eu framework for financial stability is fully prepared to respond to the greater possibility that risks may be cross - border in nature or in origin. this calls for ( i ) enhanced interplay between home and host authorities, especially with regard to significant foreign entities in host countries, and ( ii ) the development of effective arrangements for dealing with large and complex eu banking groups. ii. policy initiatives what has been done so far to strengthen the eu financial stability framework in order to achieve these objectives? such a framework comprises arrangements for banking supervision, financial stability monitoring, crisis management and deposit insurance. in the area of banking supervision, two important policy initiatives have recently been taken to enhance home - host cooperation between supervisors and to strengthen cross - border arrangements for the supervision of large and complex banking groups. the first policy measure is the improved legal framework for supervisory cooperation regarding banking groups with foreign subsidiaries, introduced by the recently adopted capital requirements directive ( crd ). in particular, the crd entrusts the consolidating supervisor with 1 / 2 coordination responsibilities. it also strengthens and clarifies the requirements for information sharing and cooperation between all authorities responsible for the supervision of group entities. this improved framework should promote and facilitate effective supervisory cooperation, especially for large groups that are active in several countries. the second important policy measure is the extension of the lamfalussy framework to include the banking sector and the related activities of the committee of european banking supervisors ( cebs ) to promote supervisory cooperation. the forthcoming cebs guidelines for supervisory cooperation will provide concrete guidance for the effective and consistent implementation of the revised legal framework for cross - border banking groups. this will also increase the effectiveness of the arrangements for supervisory cooperation with regard to cross - border banks that have a significant number of foreign branches in host countries. i would also like to remind you briefly that important initiatives have been taken to enhance the other public policies safeguarding financial stability. for example, in the area of financial stability monitoring, the economic and financial committee ’ s recently established financial stability table has played an important role in forming a comprehensive assessment of risks to financial stability in the eu