. 5 accountability independence does not mean arbitrariness. the ecb was given a democratic mandate. it is held accountable for acting in line with this mandate, both democratically and legally. from a democratic perspective, the ecb is accountable for its policies to the representation of eu citizens. as described in the report, the ecb ’ s president participates in quarterly hearings of the committee on economic and monetary affairs of the european parliament. as mep tremosa i balcells knows very well, these are not “ dialogues de sourds ”. the meps do not shy away from asking critical questions. as the president emphasised at his september 2016 hearing, the ecb takes these exchanges very seriously. in addition to the regular quarterly hearings, my executive board colleagues and i also participate in hearings of this committee to explain the ecb ’ s reasoning and decisions on specific topics. just last year, i visited the european parliament twice to discuss the proposal for a euro area budgetary capacity and the ecb ’ s involvement in greece. in about ten days ’ time the ecb, as it does every year, will publish its annual report and the vice - president will present it before the european parliament. later in the year, the president will also attend the plenary debate on it, which precedes the parliament adopting its official position on our activities. this european parliament resolution is an important contribution for our work, as it summarises the views of the representatives of the european people on our actions and policies, also in the fields of independence, transparency, accountability and integrity. we take the european parliament ’ s comments and suggestions very seriously. 6 i could continue with other examples showing the health of the relationship between the 2 / 5 bis central bankers'speeches european parliament and the ecb : from the governing council decision to adopt principles that increase transparency in developing ecb regulations on european statistics, to the ecb ’ s readiness to discuss questions on the work it is engaged in in the basel committee, of course within the confines imposed by confidentiality requirements. and i could mention the separate accountability channels foreseen with the establishment of ecb banking supervision, based on the interinstitutional agreement ( 2013 / 694 / eu ) between the european parliament and the ecb. last week, the chair of the ecb supervisory board was at the european parliament to present the ecb annual report on supervisory activities 2016. of course, i leave it to mep

and the tolerance of risks. if, however, the costs of bad decisions are not entirely borne by the economic agent, significant distortions are introduced, leading to misallocation of resources. therefore, as a fundamental principle, one has to ensure that incentives of all agents are correctly aligned with the cost and benefits of their financial decisions. still, even when from an individual perspective agents seem to follow a sound behaviour, macro - financial factors, particularly related to the interconnectedness of financial markets and institutions, the interaction between finance and the macro - economy can contribute to the build - up and propagation of aggregate macro - systemic risks. these effects have been at the heart of the recent financial crisis and it has specifically highlighted the need for a macroprudential approach to regulation and supervision, focusing on the financial system as a whole, complementing the existing micro - prudential framework. macro - prudential policies aim to contain the build up of imbalances and ensure that the financial system is better able to withstand shocks. they will focus on regulatory and supervisory actions aimed at curbing the macro risks of financial market activity. in this regard, it is, of course, of utmost importance to have a close co - operation and exchange of information between the institutions in charge of macro - and micro - prudential supervision. in the eu, the ecofin council has agreed to establish a new independent body responsible for macro - prudential supervision, the european systemic risk board ( esrb ). the main task of the esrb – in which the european system of central banks, the supervisory agencies of the 27 member countries as well as the newly created european authorities will play a key role – is to identify and assess risks to the stability of the eu financial system and issue risk warnings if systemic risks appear to be significant. if deemed appropriate, the esrb can make explicit policy recommendation. however, the responsibility for the implementation of macro - prudential policies lies with national authorities. 4. conclusions we live in very challenging times. although the increased interconnectedness of global financial markets have facilitated the build up of imbalances and transmission of shocks, financially integrated markets have served europe well and remain a necessary pre - condition for the proper functioning of the euro area. the ecb will therefore continue its efforts to promote closer integration of our financial system. at the same time we should be aware of the opportunities, but also the challenges and risks that new developments in financial markets pose to financial stability