risks we might think are low but in fact are not. since the end of 2007, major banks in the united states and europe have increased their common equity capital by $ 575 billion and their common equity capital ratios by 25 per cent. canadian banks are setting the pace. since withstanding the financial crisis, they have become considerably stronger. their common equity capital has increased by 77 per cent, or $ 72 billion, and they already meet the new basel iii capital requirements six full years ahead of schedule. clarity greater clarity, the second “ c, ” is critical to well - functioning capital markets. in the run - up to the crisis, financial institutions became increasingly opaque. their balance sheets were stuffed with mark - to - model assets, massive undisclosed contingent exposures, and debt classified as regulatory capital. annual reports ran over 400 pages in some cases, leaving investors exhausted but no better informed. in the past few years, there have been some improvements, including better accounting for off - balance - sheet securitisations, and enhanced disclosures of credit risk and the transfers of financial assets. encouraged by the g - 20, u. s. and international accounting standard - setters have made progress toward a single set of high - quality reporting standards, particularly in the areas of revenue recognition and asset valuation. but more is required. the two boards have not yet been able to agree on a common approach for asset impairment based on expected, rather than incurred, losses. the g - 20 has now called on them to redouble their efforts. one of the most important initiatives to improve clarity is the work of a private sector group, the enhanced disclosure task force ( edtf ), which was formed at the encouragement of the financial stability board ( fsb ). 3 it has made a series of recommendations to improve annual financial reporting by banks based on seven principles. disclosures should be clear, “ enhancing the risk disclosures of banks, ” report of the enhanced disclosure task force ( 29 october 2012 ). bis central bankers ’ speeches comprehensive, relevant, consistent, comparable, and timely. finally, annual reports should explain how risk is actually managed. once adopted, enhanced disclosure will contribute to effective market discipline, better access to funding, and, importantly, improved market confidence in banks. the bank of canada joins the office of the superintendent of financial institutions in encouraging major canadian banks to implement the edtf standards as soon as is possible. better disclosure of a bank ’ s current financial condition can be

framework. * * * ladies and gentlemen, i believe the discussions you are going to have today and tomorrow will provide important insights for addressing these issues too. i would like to thank the organizers of the workshop : francesca lotti and francesco manaresi from the bank of italy, salome balsandze from the einaudi institute of economics and finance and the cepr, and luigi marengo from luiss - guido carli university. i also thank alessandra piccinini from the bank of italy for taking care of the logistics. i welcome you once again and wish you a fruitful exchange of ideas, as well as a pleasant stay in rome. designed by the printing and publishing division of the bank of italy