of regulatory policy. from this point of view, reinforcing cooperation between regulators and the industry actors, offers greater efficiency and flexibility than does the unilateral top down approach by which the regulator imposes the structure and details of rules to the industry. one recent example of a positive implication of the private sector was the response to regulatory concerns regarding the transparency issue on hedge funds. it seems that voluntary industry codes can facilitate market - based solutions and thereby relieve pressure on supervisory resources. such an approach will be probably more appropriate to solve problems, particularly in the context of increasing market innovation. 3. another way looking at the principles versus rules - based approach is the ultimate goal of the standards. indeed, the means needed might vary from a strongly rules - based towards a soft - law approach. while if your ultimate goal is consumer or investor protection or market abuse, rules may be the right response. for other objectives such as avoidance of systemic risks and macroeconomic stability, it may be more appropriate for the regulator to favor principles. in this context, the policy makers have to strike the right balance to reconcile the desirable clarity of rules with the idiosyncratic flexibility of the principles - based approach. 4. yet another way to assess the rules versus principles debate is the scope of both standards i. e. what needs to be covered by rules and what can be left to principles. this scope can evolve over time. one of the main points in case is accounting. this topic has been raised after the collapses of some important players combined with other fraudulent accounting practices. these collapses lead some to question whether overly prescriptive regulation may conduct to perverse incentives, whereas others argue that the reasons reside in the lack of judgment on the level of the audit function, rather than in the non - compliance with rules. within the european union, the impetus for accounting reforms stands mainly from the objective of creating a fully - fledged single market. the need to overcome differences in accounting standards between member states is a crucial step towards the integration of financial markets. in accordance with this process, the goal of the international accounting standards board ( iasb ) is to develop harmonised accounting standards in order to increase comparability and transparency and facilitate better capital allocation. the ifrs / ias standards issued by this board, which is jointly financed by public and private resources, are expected to be endorsed by the european commission. in this regard, these principle - based standards offer an adequate framework for cross - border convergence of accounting

what monetary policy can and cannot do. the ecb ’ s non - standard measures in living up to these “ ten commandments ” sketched out before it is well understood that in practice central banks need to perform a balancing act when carefully assessing the costs and benefits of unconventional measures. against this background let me briefly review the main characteristics of the non - standard measures adopted by the ecb in the wake of the financial crisis. most measures are mirrored in the size and composition of the eurostem balance sheets, reflecting its role as liquidity provider of last resort in the crisis : to monetary counterparties, to markets and ultimately to the real economy. • the bulk of liquidity support has been via lending operations ( against collateral ), rather than via outright purchases. this practice is closer in line with the ecbs operational framework, limits balance sheet exposure and facilitates endogenous exit. at the same time, both modalities are in principle also part of the toolkit of traditional instruments for monetary policy operations. • with the adoption of fixed - rate full allotment in liquidity provision, lending is almost done freely against collateral to deal with impaired money markets, while quantities respond endogenously to the degree of stress in interbank markets. • extension of ltros maturities up to 1 year in 2009 and to 3 years in 2011 / 12. this lengthening of the maturities still remained broadly within the realm of short - term liquidity provision while addressing uncertainty on bank funding. • covered bond purchase programmes were limited in size and duration. they were targeted to malfunctioning markets and are important bank funding instruments. this bis central bankers ’ speeches was done with a view to act as catalyst for market activity ( notably in 2009 ) rather than replacing private market activity. • the securities market programme in place from 2009 - 2012 again aimed at specific dysfunctional government bond markets, where volatility had increased and liquidity diminished. purchases were not aimed at targeting specific yields and were fully sterilized to offset impact on the size of the eurosystem balance sheet. • the outright monetary transactions announced last september to address unwarranted tail risks, allow for ex ante unlimited interventions, but are subject to strict conditionality ( imf / eu programme ) to address concerns over moral hazard. they are also restricted to maturities up to three years. all of the ecb ’ s non - standard measures seek to balance the benefits and possible adverse side effects of what monetary policy