the right direction. to solve some of the problems of coordination of information and assessments, i propose the establishment a new pan - european body, a european organization for financial supervision ( eofs ). the idea is to create a separate agency to follow the major cross - border banking groups in europe. the eofs should only focus on the presently about 40 truly cross - border banking groups and not deal with the about eight thousand european banks with a predominately national character. the eofs should have three tasks : it should gather information about the banking groups and their activities in different countries. importantly, it should also create unified risk - assessments of each cross - border banking group. finally, it should also oversee the activities and risks of these banking groups. to achieve these tasks, there is a need for a separate agency, staffed with a sufficient number of competent employees. initially, these employees could of course be recruited from the existing national supervisors. also the staff of the eofs would have to cooperate with the national supervisors. i also want to stress that the eofs should be an independent agency. this independence is important to achieve a division of labor and power. it should not be part of the european commission and not of the ecb. one possible solution is therefore that eofs is established directly by the eu countries and with an obligation to report to the european parliament. my proposal is therefore quite different from the existing cebs - structure which is part of the lamfalussy regulatory framework in the eu. although some of the eofs ’ s tasks would overlap with those of cebs, the focus is different. cebs ’ s main tasks are to advice the eu - commission, to enhance supervisory co - operation and to contribute to convergence of member states'supervisory practices. cebs is therefore a regulator and not a supervisory agency. the eofs would be much more of a supervisor with as main task to produce coherent assessments of the risks and vulnerabilities of cross - border banking groups. in my view and to start out with, the eofs need not have formal powers, with the exception that it should have the right to require cross - border banks to submit information. formal supervision could still rest with the national supervisors according to the existing home - host arrangements and potential sanctions be decided by the national supervisors. in this respect, the eofs should be limited to suggesting actions to the national supervisors. furthermore, the work conducted by

, by contrast, would have an advantage, not least because at1 coupons are tax - deductible in most member states. to sum up : banks would become less resilient and the playing field less even. but let me come back to basel. the reforms we agreed on in basel do make sense, and they strengthen the resilience of banks. a key feature of the reforms is their global nature. they are designed to ensure not only safer and sounder banks but also a level playing field. so if reforms are not implemented as agreed, the playing field will become uneven, opening the door to regulatory arbitrage. but regulation is not the only game in town, of course. supervision counts too. and although supervisors need rules to guide their work, they see that not everything can be or should be captured by rules. global reforms such as those devised in basel and their transposition into european law cannot be perfectly tailored to each and every business model that banks pursue. at best, rules can cover the average case. this is particularly true in a sector that is changing as quickly as banking. so it is up to the supervisor to adapt the capital requirements to a bank ’ s specific risk profile in order to cater for deviations from the average case. to this end, the rules should be principlebased and leave sufficient discretion to the supervisors. in the european context, this need is even greater, as nowadays, we often have to deal with 19 slightly different national rules applying to the same case. 2 / 3 bis central bankers'speeches common principle - based regulation, applied to all 19 countries, would allow supervisors to cater for bank - specific risks in their national environment, thus ensuring a level playing field. so, let me conclude. the overarching question is : have the reforms so far helped to make the banking sector a safer place? my answer is : yes they have, but they still need to be finalised. the key point is to implement the reforms, to turn them into actual law. so, we cannot stand still ; we have to move on. and under no circumstances should we move backwards. thank you for your attention. 3 / 3 bis central bankers'speeches