fsb to develop macro - prudential tools, together with the bank for international settlements ( bis ), to identify and take account of macro - prudential risks across the financial system and limit the build up of systemic risk for regulated entities. moreover, the envisaged cooperation between the imf and the fsb for the conduct of early warning exercises will be crucial for the success of the global monitoring of systemic risks. second, we need to undergo global regulatory and supervisory repair. the basel committee has already set some milestones in this regard including the publication of the principles for sound liquidity risk management and supervision 1 and its current work on strengthening the basel ii capital framework. work is also underway concerning the development of measures to mitigate pro - cyclicality stemming from the regulatory frameworks, namely by building buffers in good times that can be withdrawn in less benign conditions. in this context, let me recall that the g20 leaders approved the recommendations by the fsb to address procyclicality, which are to be implemented by the end of this year. to this aim, the basel committee is developing proposals for countercyclical buffers and ways to promote provisioning over the cycle, with the aim to come up with concrete proposals by year - end. [ let me also mention some other important strands of work of the basel committee in the pursuit of strengthening the resilience of banking systems, such as the introduction of a non - risk based supplementary ( to regulatory capital ) measure, strengthening the quality of banks ’ regulatory capital and the review of the minimum level of regulatory capital with the aim to arrive at a total level and quality that should be higher than the current basel ii framework. for this last point, let me mention the importance that increases in the minimum regulatory capital, as a result of the aforementioned initiatives, “ principles for sound liquidity risk management and supervision ”, endorsed on 25 september 2008 ; and consultative papers on the enhancements to the basel ii capital framework, issued on 16 january 2009. should not take place in periods of economic and financial stress. this has been explicitly stated by the basel committee itself, but i would like to restate the importance of this point. 2 ] and third, regulatory gaps need to be closed. in that respect, the g20 leaders endorsed last april the extension of the regulatory net to all systemically important institutions, markets and instruments. these include systemically important hedge funds, credit rating agencies and over - the - counter

gertrude tumpel - gugerell : the post - crisis financial architecture speech by ms gertrude tumpel - gugerell, member of the executive board of the european central bank, at the saint petersburg international economic forum, saint petersburg, 6 june 2009. * * * let me first say that i am delighted to participate in this highly interesting event in the beautiful city of saint petersburg. the architecture of the historic city centre, consisting mainly of baroque and neoclassical buildings of the 18th and 19th centuries, is indeed striking. it is no wonder it constitutes unesco world heritage. the architects who designed those buildings looked towards the future, and indeed their design has passed the test of time. in the same vein, we - as the architects of the post - crisis financial era - should build a structure that will pass the test of time and shape the future of financial regulation and supervision. thus, i am pleased to present my views on certain key features of the future financial architecture and i look forward to also listening very carefully to the views of the other panellists. but let me also stress the importance of this forum also because of its focus on russia, a large neighbouring market to the euro area and an increasingly important counterpart to the euro area banks. in the last eight years, lending activities of euro area banks in russia have more than doubled, with the banking sector representing one quarter of this involvement. therefore, we in the euro area all the more share the interest in ensuring financial stability in russia which would be for the benefit not only for the eu but for the world as a whole. i will focus my remarks on the challenges that the current crisis poses to the global financial architecture and on how they should be faced. in this context, i would also like to highlight that the current political impetus for reinforcing the global financial architecture should be seen as a window of opportunity to reinforce national institutional frameworks and increase the pace of reform at the local level. challenges for the financial architecture so let me start with the main challenges that we are currently facing. as you know, financial markets have experienced an extensive correction since august 2007 which, after the demise of a renowned wall street bank in the fall of 2008, turned into a fully blown financial crisis. [ these developments have clearly highlighted weaknesses in our financial system. to begin with, the undervaluation of risks and the lack of transparency resulted in unprecedented levels of uncertainty and mistrust in the financial markets. this rendered some banks vulnerable to the sudden disruption