the majority of the steering committee members represent the eu institutions and in addition there are four elected members from the national central banks. two advisory committees have also been set up – the advisory technical committee, chaired by stefan ingves of the riksbank and the advisory scientific committee chaired by professor martin hellwig of the max planck institute. the advisory technical committee ( atc ) mirrors the composition of the general board with 62 members. the advisory scientific committee ( asc ) is smaller, consisting of only 15 academics and the chair of the atc. i have been a member of the esrb and the atc at its first meetings box 1 steering committee members esrb chair ( ecb president ) and first vice - chair ecb vice - president governors of 4 central banks european commission representative chairpersons of the three esas president of the efc atc chair asc chair the esrb general board held its inaugural meeting in january and has since met three times. it will meet again in december. the meetings were prepared by the secretariat, the steering committee and the advisory technical committee. the atc has also been supported by the work of several working and expert groups. the esrb ’ s work so far i hardly need to point out that the esrb started in a very difficult period when systemic risks in europe seemed to be greater than ever and when political and economic issues were tightly interconnected. obviously, the work of the esrb has largely focused on the immediate challenges of the current situation. but work is also taking place on more longterm structural challenges to the eu financial system. the vicious financial triangle at its june meeting, the esrb concluded that the most serious threat to financial stability in the eu stems from the interplay between the vulnerabilities of public finances in certain eu member states and the banking system, with potential contagion effects across the union and beyond. at the last meeting on september 21, the esrb stated that the risk to stability has increased considerably. i think we can all agree with this conclusion. over the summer, the weakening prospects for economic growth have further added to the difficulties. we now face a dangerous interplay between fragile public finances, weak banking sectors and low economic activity both at global and eu levels – the vicious financial triangle. it was right of the esrb to put this issue at the very top of its agenda, in spite of its highly political content. anything else would have bis central bankers ’ speeches seriously hurt the credibility of the

lars nyberg : the esrb – reflections after 9 months of operation speech by mr lars nyberg, deputy governor of the sveriges riksbank, at norges bank ( central bank of norway ), oslo, 27 september 2011. * * * the financial crisis that started in 2007 – 8 exposed serious weaknesses in the regulatory system. firstly, it turned out that the banks had too little capital and that the quality of that capital was not good enough. furthermore, issues of liquidity had largely been neglected by regulators. all this has been addressed by the basel iii compromise, which is to be slowly implemented over the years to come – too slowly in the view of some countries, too quickly according to others. secondly, the crisis revealed some embarrassing weaknesses in the eu framework for financial stability. the quality of supervision varied substantially between countries and coordination within europe was insufficient, to say the least. perhaps even more importantly, the concept of macro - prudential supervision ( i will return to this concept in a while ) was largely unheard of. to address these issues, the commission, in late 2008, set up a group ( where i had the honour of being a member ) led by jacques de larosiere with the mandate of presenting a roadmap for strengthening the european supervisory framework. the group delivered its report in march 2009. one of the main ideas was the creation of a new institution, which eventually came to be called the european systemic risk board and which is my subject for today. thirdly, the crisis made it apparent that the framework for the resolution of failing banks was grossly inadequate. although steps have been taken to address this question in several countries, a lot of issues remain to be solved, particularly relating to cross - border failures. but this is not for today ’ s discussion. the eu ’ s financial trilemma the core of the challenge facing the eu is conceptually quite simple. in europe, we have built a framework based on the logically inconsistent idea of having one single market controlled by 27 sovereign nations. from a financial stability point of view, this is definitely no recipe for success. on the contrary, it is a source of coordination problems and conflicts of interest among the eu countries. this challenge has been described by professor dirk schoenmaker as the “ financial trilemma of europe ”. we have three goals – financial stability, integration, and national sovereignty – but only two of these can be reached. figure 1 bis central bankers ’