and that the so called ‘ grey ’ or ‘ independent ’ directors are truly ‘ independent ’. 20. how to improve the liquidity of banks ’ assets – both loans and investments? for the securitisation markets to develop we need to improve the quality of loan origination, which solely depends upon ‘ ownership of decisions ’ relating to loan origination. directed lending in whatever form and outsourcing the loan appraisal function dilutes the concept of owning up this crucial decision and hence impacts effective monitoring and asset quality while those who have outsourced the loan appraisal have no commitment to the quality of the loan. coming to investments, how do we convert a ‘ directed investment ’ portfolio of government securities into a liquid and desirable part of the asset portfolio aligning the same with the new liquidity coverage ratio ( lcr ) norms while making way for an effective yield curve off which corporate bonds and loans can be priced out and also aiding better monetary policy transmission. debt overhang 21. let me turn to the issue of debt and financial leverage in general and in particular the corporate leverage in the post crisis context. businesses all over the world were impacted in general due to demand slump. indian companies too have been hit given the fact that they went ahead with their expansion plans before the crisis, unaware of what was unfolding. in the developed economies, the ultra - easy monetary policy measures, which also had a quasi - fiscal side to them, provided an outlet for the liquidity of the corporate bonds – either directly through purchase of corporate paper or through the massive purchases of government and agency bonds in turn providing liquidity to the corporate bonds thanks to ‘ search for yield ’ strategies. this was besides the corporate bailouts, like the auto industry in the us. leverage in its extension can be debt overhang. interesting though is the larger issue that jurisdictions where interest rates are negative or close to zero, the concept of “ debt overhang ” becomes meaningless, rendering high debt - to - gdp economies and their highly leveraged corporate solvent, which otherwise are not. we do however recognise the risks that reckless corporate leverage poses to the financial system and the systemic stability, but the issue needs to be tackled with solutions and timelines that are non - disruptive. looking for the triggers 22. that brings us to the point that the triggers of financial instability can lie outside the financial system and our illustrative list of “ macro prudential factors and tools ” can still be insufficient.

of collateral to the eurosystem, in turn allowing counterparties to optimise the use of their collateral assets with central banks and in the market. to enhance this process even further, the eurosystem is also cooperating with the market to achieve interoperability between the different tri - party offerings. another very important initiative in this respect is target2 - securities or t2s, which is a single platform for the settlement in central bank money of potentially all securities transactions in europe. the idea of consolidating numerous systems into a single platform managed by the eurosystem was triggered – on the cash side – by target2, which brought about an upheaval in terms of banks ’ ability to manage their liquidity in central bank money throughout the euro area. furthermore, target2 made it even more apparent that a fragmented securities settlement landscape, such as the one we have in europe, can give rise to serious inefficiencies and risks. as of 2015, t2s will complement the integration already in place at the payment system level, and contribute to creating a true single market for post - trade services. it will increase competition in the provision of those services and thus reduce fees for end users and investors. t2s will foster financial stability by allowing seamless cross - border as well as domestic securities settlement in central bank money across all participating markets. it will reduce the complexity and fragmentation that characterise the current infrastructure. moreover, t2s will support the eurosystem collateral management framework by simplifying the cross - border exchange of securities eligible as eurosystem collateral, meeting the increasing need for high - quality collateral that we are witnessing in the market today. t2s is the proof that, in spite of the current crisis, there is still an integration momentum. we are striving to build a stronger euro area and in particular stronger euro area markets. one final point on the subject of lvps : given the importance of sound payment systems and market infrastructures for the effective implementation of monetary policy and financial stability, robust oversight arrangements with adequate central bank involvement are critical. we have recently seen decisive progress in this area. the april 2012 cpss - iosco principles, agreed by central banks and securities regulators worldwide, have strengthened respective international requirements. similarly, at eu level, the new european market infrastructure regulation ( emir ) provides for the close involvement of central banks of issue, such as the ecb, and central bank overseers in