experts fly in and fly out? if certain compliance tasks are outsourced, is bank management providing effective oversight? vendors must be scrutinized and, very simply, outsourcing cannot diminish, in any way, the firm ’ s accountability. these objectives may be met through a variety of organizational models, depending on factors such as the size and nature of each bank ’ s businesses, its geographical scope, its culture and existing reporting lines, and the legal and regulatory framework in which it operates. there is no “ one - size - fitsall ” organizational model that we require or even expect. implications for supervisory authorities let me now offer a few key principles for the way in which supervisors should be carrying out their responsibilities. first, supervisory authorities have a responsibility to establish clear regulatory requirements, supported by industry and examiner guidance. the goal is to have well - structured rules that implement legal requirements, supplemented by guidance outlining where and how discretion may be exercised. second, supervisors should employ judgment in how they deal with problems that are found. depending on factors such as the severity of the problems and the responsiveness of management, the federal reserve uses the range of methods at its discretion - from offering recommendations in an exam report, to entering into confidential supervisory actions, to the taking of formal public enforcement actions. third, we need to continue to increase coordination among regulators, both internationally and within the u. s. this will lead to a greater consistency in the overall supervisory approach that is followed, as well as more consistency in the messages conveyed to individual firms. • coordination in development of policy is important. as an example, in 2005, the basel committee published a high - level paper on compliance risk and the compliance function in banks that supervisors around the world are making use of. • on a more firm - specific level, we, as a host supervisor, look to have effective coordination and communication with the home country supervisor - particularly when we find a serious problem, such as a significant compliance issue. it is our policy to share our concerns with home country supervisors, so that they will not be surprised and, even more importantly, will be able to make judgments on the implications of our us findings for the global organization. in certain circumstances, this could lead to very explicit and public coordination of enforcement actions with home country supervisors. in several recent cases, the federal reserve has taken action to deal with a specific us compliance problem, while the home country supervisor has taken a leadership role in a broader

will take years and years. we would have to change the eu treaties, we would have to change our constitutions, even in the sense of having a referendum, for instance in the case of germany. would they rather go back to the d - mark? no, the german public is clearly committed to a stable common currency. but in the periphery the house is burning. and some are asking what is the ecb doing? why can ’ t it be a lender of last resort? the ecb has already gone a long way towards preventing an escalation of the situation. it has cut interest rates. it continues to provide almost unlimited liquidity at very generous terms and decided several non - standard measures. by doing so, it has stretched its mandate considerably. if it acted as a lender of last resort to governments this would redistribute solvency risks among national taxpayers, for which there is no democratic legitimacy, and is hence strictly forbidden in the eu treaties. do you consider that spain hesitated too long before asking for help? i think the spanish government hesitated, hoping that there would be other means of financing with no conditionality attached. bis central bankers ’ speeches are you afraid of hyperinflation? it is not a question of german “ angst ” of hyperinflation, it ’ s the lesson of our more recent european history in the 1970s and 1980s when countries like italy, spain and france experienced intolerably high inflation rates. i don ’ t want to reopen the debate with our italian friends on the marriage between the bank of italy and the government until 1981. but i think this was clearly not a system to serve as a role model for europe ’ s future. all these calls for monetary financing, for the central bank to step in as the only actor able to do something, would take us back to the 1970s. but if a price stability mandate, there is an other mandate of financial stability because there ’ s no financial stability in europe. there is a clear pecking order. the overriding goal of the eurosystem is to maintain price stability, and in the long run this is the best contribution we can make to financial stability. but as i said, the eurosystem has also contributed to preventing an escalation of the crisis in the sense that we cut interest rates to historical lows, provided almost unlimited liquidity to banks, and decided on numerous non - standard measures. the problem is that if politicians have