differences include most notably so - called national discretions and options. on one hand, the new framework provides for a gradual transition to the new capital requirements, in line with the basel iii accord. the regulation gives countries some discretion in setting the pace of convergence towards the new requirements, which may give rise to temporary differences in the treatment of some specific aspects. for instance, a country may decide to bring forward the application of the new capital conservation buffer, initially envisaged for 2016, or the deduction of certain capital components. moreover, the regulation provides for a series of national options that might give rise to permanent differences in the treatment of specific aspects. it is logical that the ssm should work to achieve a degree of harmonisation, seeking to restrict national options of a permanent nature. it is perhaps less logical to take steps in the case of temporary discretionary arrangements, which by their very nature must disappear within a few years. different accounting practices, especially as regards provisioning, also significantly affect the uniformity of capital figures and should be a supervisory concern. it is thus reasonable to expect the ssm to contribute to convergence in the interpretation of international accounting standards. and it is essential that the ssm should strive equally to revise the calculation of riskweighted assets. that will call for a detailed review of the risk models used by banks and the adoption of corrective measures should unjustifiable deviations be detected. macroprudential policy macroprudential policy, insofar as it seeks to identify systemic risks, prevent them and increase the industry ’ s resilience, has an important role to play. the very nature of these risks is global in dimension, meaning that coordination between the various authorities with responsibilities in this field is needed. at the same time, it should be borne in mind that while the risks may be considered common to the euro area as a whole, their impact and intensity vary from country to country. this heterogeneity not only depends on the characteristics of each country, but also on the particular juncture of the financial cycle. for example, at present certain euro area countries evidence risks associated with excessive real estate market prices, while in others this risk is not discernible. macroprudential policy thus requires a coordinated approach by the various institutions, and at the same time attention must be paid to considerations of a national nature. in a monetary bis central bankers ’ speeches union like the euro area, the heterogeneity

legislative reforms ; ( b ) the requirement that institutions have resolution plans in place ; ( c ) assessment of the effective resolution ability of the authorities of the respective crisis management groups ; and ( d ) the need for institutions to have the loss - absorbing capacity or funds to ensure that, in a situation of resolution, it can be carried out “ from within ”, i. e. without need for capital injections by the relevant authorities and without destabilising the financial system as a whole. allow me to take a moment to talk about loss - absorbing capacity in resolution, or total lossabsorbing capacity ( tlac ). on 10 november the fsb published a proposal on the tlac requirement to be met by systemically important banks, the final design of which is scheduled for the end of 2015. the consultative process of the tlac proposal will be conducted in parallel with an impact study which will include ( i ) an analysis of the tlac needs for each institution which may have to be resolved ; ( ii ) a survey to assess the depth of the market in each jurisdiction bis central bankers ’ speeches involved ; ( iii ) an analysis of the historical losses incurred by global systemic banks at the height of the crisis ; and ( iv ) an assessment of the economic impact of the proposal, both at institution level and as to how it will affect the supply of credit. the difference from the basel requirements lies in the instruments eligible for meeting the new requirement. thus, in addition to all the equity instruments envisaged under basel, the proposal permits, and in fact requires, the inclusion of debt instruments, generally subordinated debt instruments. experience shows that capital may disappear in a crisis, and quickly so. the authorities must, therefore, have debt and equity instruments which ( through debt reduction and / or conversion into equity instruments ) allow them to resolve and recapitalise institutions from within, without need for bail - out by the public authorities. will this be the end of the reforms? i think not, at least as far as other financial sectors are concerned. the considerably higher prudential requirements on banks naturally cause some credit intermediation to shift to other financial sectors, in a phenomenon commonly known as “ shadow banking ”. the fsb has set in train two courses of action to prevent an excessive concentration of banking risk off the balance sheets of banks : first, it monitors their size, activities and risk characteristics ; and second, it is working on the introduction