the financial system more diversified, and make it easier for enterprises to access finance on international credit markets in times of tension. what is more, they play a part in ensuring that savings are not invested solely or primarily in equity markets, which could promote herd behaviour. lcbms facilitate the smooth market - based financing of investment needs. first studies, which require substantiation, back up the assumption that developed lcbms also help dampen the volatility of international capital flows, a finding of major significance in the light, in particular, of this year ’ s g20 discussion. they broaden the spectrum of investments for international investors and facilitate their global search for diversification. according to some commentators, lcbms actually contribute to rebalancing by keeping savings at home. these savings not only boost domestic investment and consumption, they also increase the country ’ s propensity to import. this is only an abbreviated list of the potential advantages identified during the financial crisis, although some of them are as yet no more than a scientific working hypothesis. analyses of this kind always beg the question of their practical implications for any amendments to concepts for technical assistance that may be necessary or changes to priorities. this workshop can bring us an important step forward by also helping to formulate key questions for further research. some key questions concern technical assistance itself, however, and are related more to the structure and state of development of the relevant countries than the question of financial stability itself. the focus of the workshop is quite rightly on discussing and developing a diagnostic framework, the aim being to categorise countries by their state of development and financial structure and to determine what ta measures promise the greatest success in which countries. bis central bankers ’ speeches although many institutions are working on these issues, permit me to make particular mention of the european bank for reconstruction and development ( ebrd ). the ebrd is incorporating into this workshop major elements of its local bond initiative, which has been well received worldwide. to develop a framework that defines uniform principles for all countries is a real challenge, yet it is crucial as a means of heightening the efficient deployment of ta resources. the question of what obstacles lie on the path to deeper lcbms is not just about regulatory roadblocks or market infrastructure – which are among the usual suspects when evaluating such things. no, it is important to see local bond markets not only in isolation but also within the overall context of the financial system. for example, a

headway in resolving the crisis and in putting the euro area back on a solid footing. we have achieved a great deal but much still remains to be done – both at the national and at the european level. if we are to overcome the multiple challenges that lie ahead, all the member states of the euro area will need to work together in a spirit of cooperation and demonstrate a firm commitment to the common currency. on that basis, i am confident that the euro area will remain a stable and prosperous economy. thank you for your attention. bis central bankers ’ speeches