funds, which they use to fund us dollar assets, including trade finance. lending to euro - area banks by us money market funds has fallen by 55 per cent this past year. in response, banks have turned to foreign exchange swap markets to source us dollars, pushing up the cost significantly ( graph 9 ). graph 9 to alleviate the shortage of us dollar funds among european banks, the us federal reserve has re - activated its us dollar swap lines with a number of other central banks. this is to allow these central banks to lend us dollars to banks in their jurisdiction. until recently, however, banks had not made much use of this facility, instead seeking to reduce their need for us dollars by selling us dollar assets and cutting back on cross - border financing. following the recent reduction in the interest charged on the facility, however, usage has picked up somewhat. to try to enhance investor confidence, european banking authorities recently announced a requirement for a large number of euro - area banks to lift their core tier 1 capital ratios to 9 per cent by mid 2012. 1 it has been estimated that, other things equal, this would require about €115 billion of new capital. this is not a particularly large amount, being equivalent to about 12 per cent of these banks ’ current capital. nonetheless, there is evidence that at least some banks are unwilling or unable to raise equity and are seeking to achieve the higher capital ratio by reducing assets, particularly in offshore markets. this will add to the general tightening of global credit conditions. euro - area banks are large participants in cross - border lending, though this is mainly oriented towards other european countries and north america ( graph 10 ). their role in the asian region is smaller, though they are thought to play a significant role in trade financing. while no data are available for the recent months during which the european banking problems have escalated, anecdotal evidence suggests that a lack of trade financing is not as significant a problem in asia as it was in 2008. after including a buffer for valuation losses on their sovereign debt exposures. bis central bankers ’ speeches graph 10 australia ’ s exposure to european developments there are various channels through which developments in europe could affect australia. these include financial linkages, trade linkages and confidence and wealth effects. ( a ) financial linkages the direct exposures of australian banks to the euro area are small. their claims on euroarea countries amount to $ 87 billion, or 2. 7 per cent of total assets. moreover,

, the capital requirements directive ( crd ) – addresses the issue of the cooperation and exchange of information at eu level between supervisory authorities themselves but also between banking supervisory authorities and central banks. the crd identifies a number of exceptions or “ gateways ” through which member states may authorise confidential information to be disclosed, in most cases subject to conditions of professional secrecy. this directive provides in particular that exchange of information should be authorised between supervisory authorities and central banks in their capacity as monetary authorities. third, in previous opinions on draft national laws, the ecb has observed that virtually all member states that have adopted supervisory models based on an independent financial supervisory authority have included provisions stipulating a duty of cooperation and authorising the exchange of information between central banks and supervisory authorities. 12 against this backdrop, it is essential to eliminate all legislative obstacles that prevent supervisory authorities from providing information to the ecb and eurosystem central banks on specific banking and financial institutions as well as to guarantee more generally a duty of cooperation between central banks and supervisory authorities, whose ultimate purpose is to put in place effective and practical arrangements for cooperation and information - sharing. this should be a priority in the european union. the european commission has recently launched a public consultation on possible targeted amendments to the crd 13 which includes aspects relating to cooperation and exchange of information between banking supervisory authorities and central banks. more specifically, the proposed amendments to the crd include two new provisions. first, “ in an emergency situation, member states shall allow competent authorities to communicate information to central banks in the eu when this information is relevant for the exercise of their respective statutory tasks, including the conduct of monetary policy, the oversight of payments and securities settlement systems, and the safeguarding of financial stability ”. second, the consolidating supervisor should alert the relevant central banks and communicate to them all information that is essential for the pursuance of their tasks should an emergency situation, see, for instance, the opinion of the ecb of 5 november 2007 at the request of the austrian ministry of finance on a draft law amending the law on banking, the law on savings banks, the law on the financial market supervisory authority and the law on the oesterreichische nationalbank ( con / 2007 / 33 ), paragraph 2. 4. 1 or the opinion of the ecb of 9 march 2006 at the request of the polish minister of finance on a draft law on the supervision of financial institutions ( con / 2006 / 15 ), paragraph