the importance of two things : we need a more transparent financial sector and we need ongoing research and development work to produce indicators that are better at revealing that systemic risks are developing, as well as other types of analytical tools. however, this is not only about discovering and understanding the risks, it is also about counteracting the development of the risks in a more concrete way. this is why we also need effective corrective tools that enable the authorities to better influence risk behaviour in the financial sector and thus reduce the risk of crises in the future. this includes, for instance, finding ways to ensure that the assessments of the authorities have a sufficient impact on the risk behaviour of the financial players. apart from effective communication, we also need to think about whether we have the " teeth " needed to put sufficient pressure on the players to make them change their behaviour. for example, the possibility to im - pose an extra capital adequacy requirement on particularly large and complex ( and therefore systemically - important ) banks has been discussed. another proposal is to set a ceiling for the loan - to - value ratio, that is the size of the loans the banks may offer in relation to the value of the collateral. in addition, there are various proposals that aim to reduce the liquidity risks that have arisen because the banks have become increasingly dependent on short - term funding on the securities markets. the corrective tools also include more or less automatic mechanisms that we can use to reduce the kind of procyclical behaviour in the financial sector that i mentioned before. these are tools that can hinder financial bubbles from developing and reduce incentives to take excessive risks. proposals that have recently been mentioned in the general discussion include allowing the banks'reserves for loan losses to vary in a way that reduces rather than reinforces fluctuations in economic activity, so - called dynamic provisioning. another proposal with a similar effect is to introduce contracyclical capital buffers, that is, that we should require the banks to maintain larger capital buffers in boom periods when there is a tendency for the provision of credit to expand, but smaller buffers in periods when growth is more limited. finally, and just as important, there is a need to coordinate the gathering of in - formation and the use of various tools to promote stability between national and international authorities. work is now underway in europe to set up a new body, the european systemic risk board. one of the tasks of this board, which will be located at the

( to confirm the reliability of the institution ’ s financial statements ) and business plan due diligence ( the reasonableness of the plan ). both provide relevant information for the economic valuation of the new bank. this work is conducted using methodological and procedural approaches devised and published by the frob late last may, following advice from a panel of experts in order to include best market practices. under these approaches, financial due diligence must pay particular attention to loans and receivables, real estate assets and the investment portfolio, along with potential one - off transactions envisaged, and to potential areas of risk from a legal, tax and labour - related perspective. business plan due diligence will focus on the reasonableness of macroeconomic assumptions, growth, revenue, doubtful assets ratios and provisioning, costs, synergies and disposals. based on the institution ’ s financial statements, on the business plan and on the due diligences, three independent experts – all acknowledged authorities in their field – hired by the frob will deliver their opinion on the institution ’ s market value and the percentage of capital to which the new investment is equivalent. to ensure the quality of the result, the frob will use the conclusions of three experts, although it will not take into account valuations that deviate by more than 15 % from the resulting mean value. determining the economic value of the institution is thus being done with the utmost care since, as the frob indicated in its methodological note, this is of paramount importance from three standpoints : from that of community competition rules, to ensure that public aid is granted on an arm ’ s length basis ; from that of the proper use of public funds, so that they are disbursed in accordance with rigorously set subscription prices ; and from that of the institution itself and of the “ interested parties ”, because the market value will also determine the frob ’ s actual stake and, consequently, that of the former stakeholders in the resulting capital and in the institution ’ s governing bodies. on conclusion of this process, before 30 september 2011, the frob will have taken a stake in the capital of these institutions and will vote on the decisions of their boards of directors on a scale proportionate to the economic valuation. thereafter, the frob will participate directly in their management with the mission to monitor fulfilment of their business plans. it shall remain in the institutions only temporarily, and never any longer than the maximum