increasingly being held on the balance sheet of the originator bank and pledged as collateral with the central bank. second, non - marketable assets and above all, credit claims ( i. e. normal bank loans ) have become the largest single asset class in our collateral portfolio. third, uncovered bank bonds constituted the largest marketable asset type in 2009, mostly in non - guaranteed forms. however, the absolute amounts and the share started to decline sharply thereafter, due to subdued issuance volumes, increased risk aversion and concerns about the counterparty risk. in addition to the decrease in issuance, downgrades of banks have rendered a large part of this collateral non - eligible for eurosystem operations. as a result, guaranteed unsecured bank bonds now dominate non - guaranteed bank bonds. finally, due to the implementation of the two 36 - month refinancing operations conducted in december 2011 and february 2012, posted collateral in general increased, and in particular the use of covered bank bonds, which has lately become the largest marketable asset type in our collateral framework. it is equally important to analyse whether the observed scarcity of collateral in some regions follows a cyclical or a structural pattern. if it is cyclical it is mainly the result of the prevailing uncertainties in the markets and the perceived heightened counterparty risk that leads market participants to move from unsecured to secured funding, thus increasing their needs for collateral. such moves could in principle be reversible, once confidence in banks ’ resilience improves again. it has been argued however that a continued decline in, or even disappearance of, unsecured funding could have permanent effects on the balance sheet structure of banks. so, although central banks may have taken a number of measures to address the current stress on banks ’ balance sheets ( enlarging the collateral framework, purchasing assets, extending longer term this figure includes the haircuts applied by the eurosystem. bis central bankers ’ speeches liquidity, implementing non - recourse repos or swapping them with more liquid assets ), these measures can be rolled back or discontinued as soon as the crisis subsides. a structural change in the demand for collateral, on the other hand, would be more the result of a series of regulatory changes ( such as the liquidity coverage ratio under basel iii, regulatory changes on derivatives trading, the proposed capital charges in solvency ii for insurers, making it more attractive to hold covered bonds, and

is sometimes a tendency by the authorities to try to solve all problems by more regulation. it is true that we could regulate away all the risks in the banking sector – but such regulation would hamper economic development. there must be a balance. thus for each regulation we introduce we must also conduct a fair analysis of its costs, also non - financial, as well as its benefits, also non - financial. i agree that this is not easy, partly since in most cases you will not find any clearly measurable indicators, but the process of conducting the cost / benefit analysis will in itself help you in your decision. supervision good regulation is closely linked to good supervision. supervisors must be able to build their work on a broad and relevant regulatory framework. supervisors must also possess the necessary powers and other prerequisites to conduct efficient work. there are at least four important aspects : first, the supervisory authority must have operational independence from industry as well as from politicians. these must not interfere in the operational decisions of the supervisors, e. g. to take remedial measures or to close banks. such decisions must be taken on purely prudential grounds. of course, the supervisors are still responsible for their actions and could be criticized afterwards, e. g. in parliament hearings, but they must be able to perform their operational duties independently. also the bank, its owners and management should be able to sue the supervisors for malpractice and they may receive compensatory payments. however, this should not stop an action started by the supervisor to deal with a presumed problem in the bank. the supervisory management and staff must also have reasonable protection should they be sued for their bona fide decisions taken as supervisors. in some countries the supervisors are harassed by frivolous lawsuits by bank owners, managers or other parties. even if the supervisor is in the end acquitted from any guilt, the process may take years. during this time the supervisor will be severely hampered in performing her job having to concentrate on her defence. such lawsuits will also reduce the willingness of other supervisors to take necessary supervisory decisions, since they are themselves afraid of being sued. a first line of defence is to take all major supervisory decisions in a collegiate fashion at the top level. thus only the agency such can be sued as an institution. nevertheless, should individual supervisors be sued, they must be provided assistance in the court proceedings, such as legal counsel and protection against any costs. of course, if the supervisor is finally found guilty