as proposed in the september 2010 eu banking structures report. such broader performance measures would incorporate more forward - looking information, encompass more aspects of the performance than just profitability and therefore could be less prone to manipulation from the markets relative to a pure market - oriented indicator such as return on equity. moreover, it provides investors with relevant risk - based information that is useful and relevant for investors. in this context, a bis paper already proposed in 2005 the usefulness of complementing the current accounting reporting framework with risk information. 2 ladies and gentlemen, not just for the aforementioned reasons do central banks have an interest in ifrss. there is an additional reason. in particular, an increasing number of central banks around the globe either comply fully with ifrss or apply an adjusted version of ifrss. issues like ( a ) volatility in the profit and loss account from the use of fair value accounting, ( b ) poor interaction of accounting rules with profit distribution rules and the resulting impact on the financial strength of central banks, as well as ( c ) the extensive disclosure requirements that might not be in line with policy objectives become relevant in this context. i would like to emphasise that the ecb has been a strong supporter of the objectives and work of the iasb since its inception and i personally believe that the iasb has significantly progressed in a relatively short period. the iasb has recognised the widening stakeholder interest in the development of accounting standards, and i appreciate that it has actively engaged with central banks, supervisors and financial stability experts in developing what should eventually be a single set of globally accepted, high quality accounting standards. finally on this point i am delighted that mr hans hoogervorst, chair of the iasb, has agreed to join us today to share with us his vision on the future of ifrss, and i am delighted that mrs flores, chair of the european financial reporting advisory group is also here with us to present europe ’ s view regarding ifrs developments on financial instruments. the second part of this conference deals with the sensitive issue of the financial strength of central banks. this issue has become more relevant over the last years as, due to non - standard operations, balance sheet risks, and in particular credit risk, have increased for a number of central banks. a lot has been written by central bank experts in the past decade on central bank independence and the link with the central bank ’ s financial strength, sometimes with conflicting views. a number of studies have

capital. in other words, the european economy grows more, the more integrated its financial system is. for example, according to a study ( london economics, 2002 ) 1 additional growth – resulting from financial integration of the european bond and equity markets – of 1. 1 % over a period of ten years is estimated. it is against this background that the ecb strongly supports the commission ’ s policy of pushing forward the lisbon strategy by focusing reform efforts, at the national level and the european level, on “ delivering stronger, lasting growth, and creating more and better jobs ”. one of the ecb ’ s most effective contributions to these efforts is to continue to act as a strong and reliable anchor for safeguarding monetary stability, thus providing a vital element for promoting sustainable output growth. however, the relationship between monetary policy and structural reforms like european financial integration is reciprocal, in the sense that the elements are mutually beneficial. most importantly, an integrated financial system promotes the smooth and effective transmission of monetary policy throughout the euro area. london economics ( 2002 ), “ quantification of the macro - economic impact of integration of eu financial markets ”, report to the european commission. furthermore, i would like to mention that the integration of the financial system is highly relevant to our task of maintaining financial stability. deeper financial integration, on one hand, has a higher capacity to absorb economic shocks than individual countries. it can also offer more possibilities for financial institutions to manage and diversify their relevant risks and realise economies of scale, which leads to greater efficiency of the financial system. on the other hand, deeper financial integration is transforming the nature of the risks all over europe, particular attention being given to systemic risk stemming from contagion through intensified cross - border links ( for instance infrastructure, interbank exposures, shareholdings and participation ) and to moral hazard issues resulting from much larger institutions posing as a consequence much larger risks in case of failure. therefore, the interaction between financial integration and financial stability deserves thorough analysis and consideration. having discussed the economic benefits of financial integration, let me now talk about the actors involved as well as the state of financial integration in europe. the actors involved and the state of financial integration in europe the main actors involved in the process of financial integration are the public authorities and the private sector. financial integration is a prime objective of the general economic policies of the european union. charlie mccreevy, the european commissioner for internal market and services, has explained the commission ’ s proposed line of