presidency of nout wellink will result, over time, in higher capital and liquidity requirements as well as in less leverage and procyclicality in the banking system. the proposals on these measures will be issued by year - end. the calibration will take place in 2010. their implementation will be phased in, taking into account expectations for the improvement of financial conditions and economic recovery. but even though this comprehensive package is an achievement, it does not imply that the work is over. the challenges related to finalisation of the package in the coming years should not be underestimated. these include assessing the interplay of the adopted and upcoming measures, and deciding on the overall level of capital in the financial system. what do you mean by the interplay of the various measures, will they complement or reinforce each other? there will be an important interplay of the various measures. we will undertake an impact assessment to analyse their cumulative effect. the aim is not to simply add - up the various measures, but to take into account their interrelation. we need to look at the measures already taken and assess how they combine with the upcoming changes to the definition of capital, the introduction of a leverage ratio and of countercyclical capital buffers. are you not concerned that these measures will hamper efficiency of the banking sector? we need to reach agreement on the overall level of capital in the financial system compared to pre - crisis levels, building on past and recent experience including national stress - testing exercises. in doing that, we need to strike a balance between a level of capital that promotes long - term financial stability without unduly compromising growth and efficiency of the banking sector. this will be no easy feat. we have challenging years ahead of us and i strongly urge the work of the committee to continue at full speed. we mustn ’ t loose either the momentum or the window of opportunity for reform. how will these new regulations contribute to strengthening resilience of the financial system? speaking towards an audience in the netherlands let me illustrate it with an analogy, drawing on a project well known to you. the dutch have through time developed the delta project – a series of defences to protect the stability of the nation, guarding it against floods. what we are trying to build is the delta project of the financial system that will protect it from risk excesses. if i may say, in this sense we are fortunate that the basel committee is chaired by a dutchman!

and out. on to monetary policy. inflation has been dipping since october. which we projected. so, nothing surprising. you wouldn ’ t say we ’ ve been overly dependent on quantitative easing? this is a little too much of a link to qe. we expected a dip in the inflation ratio. it was clear that with the base effects of the energy prices, the inflation rate would drop. that ’ s why we ’ ve always said that we need to see a sustained adjustment in the path of inflation ; not a change in the month that we just had but a sustained adjustment. the core inflation rate didn ’ t dip that much. 1 / 2 bis central bankers'speeches you said in november that you expect rates to rise this year. do you still think that? i ’ ll wait for the projections coming in march before i change my view. i ’ m data - driven in this, and i think that as we are still in the environment we projected. i do not feel disheartened yet and then you have to think where you will start with a rise in interest rates. we have different key rates, not only one. i wanted to ask you about the ecb jobs : has the appointment process become too political? there are appointment rules, they have to be complied with. it ’ s not in the ecb ’ s power to appoint. other people appoint. we have to accept the rules. but do you not have a view on it? for me, it ’ s important to have people proposed that can do their job because of their experience and their knowledge. that for me is the most important thing. soon, we ’ ll have a new european parliament, a new commission, and a new ecb president. what ’ s the next focus for supervisors and regulators? looking forward to the next five years, for sure we have to work further on getting the banks to clean up their legacy, to strengthen their resilience, not only in regard to capital and liquidity but also in regard to risk management. this is a very important issue. what we will do in the next two years, among other things, is to look at credit underwriting standards. this is very important when the sun has been shining for so long, with so much liquidity in a low interest rate environment. this is usually the environment where banks drop their credit underwriting standards, which then lays the ground for the next crisis. so, we will look into credit under