arrangement and that the ccp collects initial and variation margin. in particular, the pfmis stipulate that a ccp must be able to withstand, in a stress environment, the failure of the member having the largest exposure to the ccp. in some cases, this requirement is strengthened to require the ability to cover the failure of the two largest members. the pfmis also require the ccps to develop effective methodologies to estimate their funding exposures, so that they can better manage their liquidity risks. another important risk management task for ccps is the on - boarding of new members and the monitoring of the condition of existing members. the strength of the ccp is ultimately derived from the collective strength of its members. the mutualization of the ccp ’ s net credit risk across its members creates an incentive for its members to only want well - capitalized and well - managed members as part of the ccp. the ccp also must ensure that members are meeting their margin requirements and remain in good standing. it is also worth noting that these safeguards for ccps will need to be put into place along with other reforms such as the use of multilateral trading platforms and trade repositories. seamless integration with these new trading processes is essential for ccps to contribute to financial stability. the financial crisis also highlighted the significant gaps that existed between the data collected and the data necessary to adequately monitor developments in the global financial system. in addition, the crisis underscored an important limitation of the current data structure : the inability to combine data effectively across jurisdictions in order to develop a comprehensive view. as a consequence, policymakers often did not have timely access to see basel committee on banking supervision and the board of international organization of securities commissions ( 2013 ) margin requirements for non - centrally cleared derivatives. see committee on payment and settlement systems and the international organization of securities commissions ( 2012 ) principles for financial market infrastructure. bis central bankers ’ speeches key information that would have informed both the diagnosis of emerging problems as well as the likely efficacy of proposed interventions. as we all know, it is difficult to safely steer a fast - moving car if outward vision is impaired by a windshield that is largely obscured. in response, the g20 in april 2009 instructed the financial stability board ( fsb ) and the international monetary fund ( imf ) to detail these information gaps and to develop proposals for resolving them. the data gaps initiative ( dgi ) was the response to carry out this

absorbing capacity, this capital buffer requirement will act to offset any funding advantages for g - sifis, helping to level the playing field with smaller, less complex financial institutions. together, when fully implemented, these changes should reduce the failure risk for g - sifis. to complement the basel framework, i believe that jurisdictions need to create processes and incentives for management of g - sifis to act earlier and more decisively in response to emerging risks facing their firms. proactive interventions by the senior management of banks will have a greater efficacy and a lower cost than reactive steps taken only in response to growing market pressure. these proactive management interventions can take many forms bis central bankers ’ speeches including raising additional capital, cutting capital distributions, restructuring business lines and making difficult personnel changes. avoiding a hazard is easier if one ’ s focal point is kept well down the road. official sector stress tests are an important tool that can facilitate this forward - looking management focus. one example is the comprehensive capital analysis and review ( ccar ) process in the united states. the goal of ccar is to ensure that banks have robust, forward - looking capital planning processes, as well as sufficient capital to withstand severely stressed economic conditions while, maintaining their ability to perform their critical roles of credit intermediation. in ccar, each of the participating banks is required to project the impact of particular forward - looking stress scenarios on their operations over a two - year horizon. both the banks and the supervisors conduct independent assessments of the impact of the stress scenarios on the various business lines of the bank. this approach provides a cross - validation of each bank ’ s analysis, while at the same time generating results that can be compared across the participating banks. another important feature of ccar is that the scenarios and the key aspects of the banks results are made public rather than treated as confidential supervisory information. this transparency is important for supporting market confidence in the banking system. finally, a critical aspect of the stress testing process is the supervisory review of the capital planning process for each participating bank. this planning process is what reinforces and promotes a proactive stance by management to emerging risks. the structure of bank management compensation also could be designed to provide incentives that reinforce a proactive, forward - looking risk management approach. as i will discuss in a moment, sufficient long - term debt that can be converted to equity is an important element of an effective resolution mechanism for g - sifis. while the magnitude of this longterm