financial markets is that hedge funds, private equity firms and the banks financing these institutions all strongly rely on techniques for credit risk transfer ( crt ) to manage their risks. while crt markets have obvious benefits in terms of allowing effective risk sharing in the financial system, excessive reliance on the functioning of such mechanisms can lead to complacency on risks. in addition, crt markets operate in a rather opaque manner which does not allow for monitoring of concentration and counterparty risks by other market participants or by public authorities. moreover, the growing spreading of more complex structured credit products raises the issue that investors in such instruments may not be able to properly assess the risks they assume. unanticipated changes in the macro - financial environment can cause model assumptions to fail and this may contribute to pricing dislocations and market liquidity problems if many investors decide to exit their positions simultaneously. all in all, i see scope for further cooperation between public and private sector entities to gather information on the crt market to improve the ability to assess potential systemic risks. the state of the fundamentals in the credit markets, crt and unregulated financial institutions can together be described as a potential “ triangle of vulnerability ” in that a shock at any corner of this triangle could have implications for the other two. for instance, a significant turn in the credit cycle could mean that credit protection - sellers, such as hedge funds, could become unable to make due payments to banks. similarly, if widespread problems were to emerge at hedge funds or private equity firms which are active in crt markets, this could even spark a downturn in the credit cycle, if it were to impair the “ originate and distribute ” business model adopted by many banks involving securitisation and hedging of lending exposures. let me conclude by saying that ultimately the triggers for any potential adjustment cannot be predicted with any degree of certainty. all that we know is that the present state of global finance – where we are observing a level of risk pricing which is historically low – is not necessarily sustainable in the long run. all parties concerned should therefore contribute to an orderly and smooth adjustment, when the time comes, and avoid an abrupt and sharp adjustment which would be adverse for the global economy. all parties concerned, public and private, have in this respect a very important shared responsibility. i thank you for your attention.

stability and efficiency of the financial system, there is the need to complete the single euro payments area ( sepa ). performance of eu market infrastructures during the financial turmoil the financial market turmoil has impacted on eu payment systems, central counterparties ( ccps ) and securities settlement systems mainly through intensified and more volatile market activity. we have also seen some peaks in transaction volumes as well as more frequent and higher margin calls. furthermore, many infrastructures have had to cope with the default of a major participant, notably in the context of the demise of lehman brothers in september 2008 and the corresponding spill - over effects on its subsidiaries. fortunately, eu market infrastructures were able effectively to overcome these challenges without any major operational disruptions. in particular, the eurosystem ’ s target system – which is not only the backbone of the large - value payment infrastructure for the euro, but also plays a central role in providing settlement services for 36 retail payment systems and 33 securities settlement systems that are connected as ancillary systems – has proven to be stable and resilient. nonetheless, i would like to mention three key stylised facts which illustrate the impact of the current turmoil : first, the values processed in target in the last quarter of 2008 showed an unusually high increase of 13 % compared to the first three quarters ( see chart 1 ). when looking at the average values settled in different time bands during the day, the main difference between the third and the fourth quarter of 2008 relates to the values settled in the last hour of operations. this reflects the strong increase in overnight deposits made by banks with national central banks as a consequence of the switch to the full allotment fixed rate tenders in the ecb ’ s open market operations, following the intensification of the crisis after the collapse of lehman brothers in september 2008. second, not surprisingly from september 2008 onwards, we see a remarkable increase in the number of sender limits along with a decrease in their value ( see chart 2 ). nonetheless, these changes had a marginal impact on the smooth flow of transactions and did not cause delays to the timely submission of payments. third, the level of non - settled payments remained fairly stable in the second half of 2008, amounting to just 1 % or so of the total daily average value settled in the system ( see chart 3 ), indicating the overall resilience of the target system in the face of the financial turmoil. crucially, market infrastructures continued to function robustly. in