assess performance and track kpis is also essential to monitor workout progress and is critical to the effective implementation of the npl strategies more generally. however, it is clear considerable gaps in it infrastructures also exist in some banks. in many cases data is simply not reliable or granular enough. for example, a key issue reported between 3 / 5 bis central bankers'speeches the bid / ask price is data. loan tapes need to include all the necessary information relating to the collateral and legal process to allow for cross - section and segmentation analysis. the standard we have set in the guidance, prescribes that all non - performing loan related data are securely stored in central it systems. where systems are not ‘ fit for purpose ’, banks will have to quickly put in place remediation plans to address these capacity gaps. as you know it infrastructure plans can take some time to implement and require investment. those plans will therefore also be subject to scrutiny by our joint supervisory teams. 4. coordinated response tackling europe ’ s non - performing loan problem, however goes beyond the supervisory domain. some reductions in non - performing loans have been noted across the euro area and a number of countries have taken proactive and coordinated prudential, judicial and other measures to tackle the issue. however, as shown by the stocktake report, in some member states a number of national practices and legal and judicial aspects still pose a considerable challenge to timely npl reduction. 5 the inefficiencies of judicial systems are considered by the majority of the countries surveyed, as an obstacle to the speedy resolution of non - performing loans, due to capacity constraints of the courts. other aspects that need to be addressed include ( i ) the lack of a modern legal framework for enabling timely out - of - court settlement, ( ii ) challenges related to both the corporate and the household insolvency system, and ( iii ) factors – such as the taxation regime or the accounting framework – that can also discourage npl resolution. the focus of the guidance is on workout. and working out npls can create a pipeline for future sales, where possible. however, the underdevelopment of secondary debt markets also impedes non - performing loan resolution in most of the countries surveyed. specific obstacles in the legal and regulatory framework appear to be the cause of such a market stagnation. this despite the fact that the majority of jurisdictions surveyed appear to have a framework favourable to transfer non - performing loans to third parties.

be compounded by concerns that overall capital levels themselves will rise. this could lead banks to hoard any new capital rather than deploy it. doing so would worsen the economic outlook, which would then increase loan losses and further strain capital levels. for example, in canada, policy - makers have been encouraging greater use of the cls bank, which facilitates the settlement of foreign exchange in an environment without counterparty risk. the explicit g - 7 commitment to systemic institutions and the various guarantee programs should be used to help spread over time the necessary capital increases. moreover, policymakers should have the courage of their ( new - found ) macroprudential convictions. with g - 20 leaders calling for regulators to develop measures to mitigate procyclicality in capital, regulators should be careful about pushing capital standards up too high, too soon in the teeth of an economic slowdown. through - the - cycle capital means that ratios should fall in a downturn. finally, some policy - makers should give greater consideration to the central bank acting as market - maker of last resort to maximize the likelihood that core money markets remain open. notwithstanding the advantages of its financial sector, as one of the most open economies in the world, canada has been importantly affected by global events. the intensification of the global financial crisis has led in canada to an increase in credit spreads and a tightening in credit conditions generally. the global recession is deepening, with demand slowing sharply across all major regions in recent weeks. as a consequence, there have been further declines in the prices of many commodities and a deterioration in canada's terms of trade, which reduces canadian incomes. the nature of the u. s. slowdown, with its acute weakness in the housing and auto sectors, is also particularly problematic for our exporters. thus, while domestic demand in canada remains relatively healthy and the depreciation of the canadian dollar will offset some of the declines in external demand, the risks to growth and inflation in canada identified in the october monetary policy report appear to have shifted to the downside. despite having already cut official interest rates in half over the past year and having a financial sector that is still functioning effectively, some further monetary stimulus will likely be required to achieve the inflation target over the medium term. act locally, think globally this leads to the final lesson from canada's experience. as g - 20 leaders agreed this past weekend, effective regulation begins at home. to meet this responsibility, canada has a formal coordination