during stressed periods, leveraged funds need to delever proportionality more than unleveraged funds in order to obtain liquidity to cover margin calls and higher haircuts on leveraged positions. also, leveraged funds have to sell relatively more assets following redemption requests to keep the leverage ratio constant. to the extent these asset sales impact market prices or are sold at fire sale prices, the net asset value of the portfolio declines. these new findings on the greater vulnerability of leveraged funds to potential investor runs support the idea that mismatches between the portfolio liquidity and redemption terms of leveraged funds are undesirable for more leveraged funds from a macroprudential perspective. they also complement existing evidence on the greater sensitivity of investor outflows to bad performance in illiquid versus liquid funds, which can be explained by higher liquidation costs for 3 / 5 bis central bankers'speeches less liquid assets. within the eu, competent authorities already have legal powers to impose macroprudential leverage limits on aifs, such as hedge funds, bond funds and funds - of - funds. the esrb has marked the operationalisation of this existing policy tool as a key part of the agenda to develop macroprudential policy beyond banking. 13 achieving this goal is important and may require an eu - level framework to assess financial stability risks related to leverage in the investment fund sector and to evaluate potential designs for macroprudential leverage limits. for risks in sft and derivatives, as i have laid in a keynote speech at a dedicated conference last year here at the esrb14, i am convinced that macroprudential margins and haircuts are tools that have the potential to allow authorities to control the build - up of excessive leverage in these markets. importantly, these tools can reach beyond the banking system and also address the build - up of leverage and liquidity risks in parts of the financial system, where we have seen rapid growth in recent years. since then, we have made some progress on this front. for example, the esrb has published a comprehensive report on the macroprudential use of margins and haircuts this year. the report describes in detail the mechanics of how these tools would affect leverage and procyclicality. nevertheless, the report also acknowledges a number of implementation challenges and calls for further empirical and conceptual analysis. so let me conclude by saying that despite the progress made, there is more work to be done : on the operationalisation of

months and years, with a view to deepening cooperation in areas of mutual interest. in this regard, i should like to mention the high - level meeting with the central banks of the accession countries to be held in helsinki next month. let me now turn to the role of the euro, the ecb and the eurosystem in the world economy. 3. the role of the euro, the ecb and the eurosystem in the world economy the introduction of the euro certainly represents one of the most profound changes in the international monetary system since the collapse of the bretton woods system in the early 1970s. the euro is the currency of an economic area with a population of nearly 300 million people and one - sixth of world gdp, which is significantly higher than that of japan, although smaller than that of the united states. the euro area is the largest trade partner in the world economy with a share of 20. 1 % in world exports, followed by the united states with a share of 16. 3 % and japan with a share of 7. 6 %. given these facts, it is stating the obvious to say that the euro and the eurosystem are likely to play an important role in the world economy. by reducing the number of key players in the international arena and by strengthening the awareness of each player to take up its respective responsibility, the euro will contribute – over time – to facilitating international cooperation. but the transfer of competence for monetary policy from the national to the community level also implied that new arrangements had to be found in order to allow the eurosystem to participate and represent the euro area in matters of its competence. devising the appropriate arrangements was complicated because of two specific features : the first relates to the fact that membership in different fora ( for example, the g7 or the g10 ) varies across euro area member states. the second derives from the fact that full membership in intergovernmental institutions such as the international monetary fund ( imf ) or the organisation for economic cooperation and development ( oecd ) is restricted to countries only. therefore, in all of these instances, specific arrangements had to be devised in order to provide for the representation of the eurosystem and the ecb. we have now reached formal and informal agreements with the imf, the oecd and the bank for international settlements ( bis ) as well as in the g7 and g10 context. let me briefly comment on two of these arrangements : • in december last