to shift part of their activities outside the regulatory realm. it is therefore decisive that we continue our work to improve our capacity to identify and assess the potential risks stemming from the shadow banking system. this includes regulatory reform of money market funds, securitisation and the interaction with the banking sector. the second challenge is how to keep pace with financial innovation. improving the otc and commodity derivatives markets is a key part of this agenda, it is a complex matter and one in which alignment of details is essential to avoid regulatory arbitrage. bis central bankers ’ speeches the third challenge is to enhance transparency across the board : with regards to markets, institutions, and products. insufficient information contributes to mispricing of risks, mistrust among market participants, which can result into downturns and crises. at our october meeting of g20 finance ministers and central banks governors we will be discussing iosco “ recommendations to promote markets ’ integrity and efficiency to mitigate the risks posed to the financial system by the latest technological developments ”. 2. improving policy discipline globally aside from a more resilient global financial system, we need to have more disciplined macro policies as the lack of discipline in macroeconomic policies in several countries led to the build - up of unsustainable external imbalances before the financial crisis. there is still a gap between the degree of economic integration and the willingness of policy makers to take into account interdependence and spillovers. keeping one ’ s house in order is no longer sufficient in an integrated world. spillovers from the rest of the world can influence economies considerably. multilateral surveillance is now being enhanced along two tracks. the informal g20 track and the formal imf track. the g20 framework for strong, sustainable and balanced growth, incorporates a first systematic multilateral assessment of global imbalances. it comes at an appropriate time because four years after the crisis, global imbalances remain unsustainably high. the sum of the current account balance ( in absolute terms ) of the major economies are projected to remain close to 2. 5 % of world gdp in the next few years. this is less than their pre - crisis peak ( over 3 % of world gdp ), but still twice as high as in the early 1990s, before the acceleration in financial and real globalization. it is now of foremost importance to implement the framework effectively, and to fully live up to the expectations that the g20 process raised internationally. the g20 cannes summit

financial stability in the euro area. in addition, this macroeconomic surveillance procedure should rely on transparent and effective trigger mechanisms. conclusions let me conclude with three key messages to policy makers – in advanced and emerging market economies alike – who all have a role to play to address the challenges that are ahead of us. first, what has already been decided has to be implemented expeditiously, comprehensively and fully. this requires resolve and fortitude on the part of the public authorities, but also lucidity on the part of the private sector. second, there can be no complacency as regards the unfinished part of our reform agenda for a stronger international financial architecture. and i cannot help saying that on top of what is clearly identified by the international community as the urgent issues under discussion in the financial stability board and the g20, we are far from understanding the potential global systemic instability that is associated today with the sheer size of the non - banking sector which experienced an exponential growth over the last 20 years. third, as regards the euro area and the sovereign debt crisis, of which the euro area is currently the epicentre, the euro area central banks, and the ecb in particular, have been permanently calling for sound economic policy management, in particular in the fiscal domain, for structural reforms and for reinforced economic governance. as independent institutions that are devoted to stability and that are medium - to long - term oriented, we are an anchor of stability and confidence. this is especially valuable in the turbulent market environment that we are witnessing and that is characterised by acute tensions of some sovereign signatures which are causing negative spillovers on others. only a few weeks ago, the central bankers were all meeting in the bis headquarters in basel in our global economy meeting. reporting to the press afterwards, i stressed that we were all very closely “ united in purpose ” : each of us in our own economy, with its different features and challenges, striving to solidly anchor inflation expectations, preserve stability and consolidate confidence. meeting here in washington, authorities have the opportunity to display the same unity in purpose to address their economic challenges at home, prevent negative spillovers for the global economy and consolidate confidence in the world recovery. now, at the end of this exposition, it might be useful for me to tell you what is the assessment that the european systemic risk board has expressed after its last meeting only two days ago : bis central bankers ’ speeches since its previous meeting on 22 june 2011, risks to the stability