the financial markets. the complexity and opacity in instruments supported also to an overreliance on ratings and rating agencies. there are various policy initiatives under way to address the aforementioned shortcomings : at the eu, in accordance with the ecofin roadmap, cebs ( in coordination with the industry ) has been mandated to review public disclosure of types and amounts of securitisation exposures, significant individual transactions and special purpose vehicles exposures by banks and to consider complementary guidelines. at the international level, the basel committee on banking supervision ( bcbs ), following the financial stability forum ( fsf ) recommendations, will issue further guidance to strengthen disclosure requirements under pillar 3 of the basel ii framework. however, the onus of identifying areas of improvement and providing useful disclosures that allow investors to assess the risk / return profile of financial institutions rests primarily with the industry. in this respect, i would like to make special reference to the european securitisation forum that since the early stages of the turmoil has acknowledged the importance of enhancing transparency. as you know, its work addresses the pertinent issues of ( i ) developing guidelines of best practices concerning securitisation disclosures ; ( ii ) providing periodic aggregate data concerning the securitisation market and ( iii ) enhancing information to investors on the composition and performance of underlying assets at issuance and on an on - going basis. availability of information is critical to maintain incentives along the securitisation chain and to enable market participants to make informed decisions. the quality of the documentation underlying issuances, such as pre - sale reports by rating agencies and prospectuses, should be improved. in addition, a sufficiently detailed disclosure of borrower characteristics and the performance of the loans over time would be important to revitalise the market. this is also of critical importance to the central banks in scheduled to be completed by june 2008. scheduled to be completed in 2009. the eurosystem, not only as market watchers but also, as i mentioned earlier, in the performance of their task of providing regular refinancing to the banking system against adequate collateral. here i would like to echo the recommendations on transparency in securitisation markets made by the financial stability forum to have standardised information about the pools of assets underlying structured credit products. supervisors and central bankers are encouraging and monitoring the market - led initiatives by the european securitisation forum and other international organisations and will evaluate the adequacy of

##ies. these two features of the operational framework in combination with the large scale temporary refinancing operations have certainly helped the eurosystem to effectively mitigate funding liquidity risk for counterparties when interbank markets stopped functioning properly. in order to understand better the specific role which abss fulfil in the implementation of our monetary policy, let me just remind you of some key elements of our collateral framework. the eurosystem has a broad definition of debt instruments and against this background a wide range of public and private securities, including asset - backed securities, can potentially become eligible if they fulfil all the other eligibility criteria. indeed, compared with the traditional concept of other central banks in the world, the eurosystem accepts a large volume of high quality abss, and has done this well before the outbreak of the financial market turmoil. in addition to the general eligibility criteria, such as the denomination in euro and compliance with our minimum rating threshold, some specific requirements apply to abss : ( i ) only the most senior tranche of an abs structure is eligible ; ( ii ) abss must be backed by assets that have been legally acquired by the special purpose vehicle ( spv ) in a manner that the eurosystem considers to be “ true sale ”, and ( iii ) the issuing spv must be located in the european economic area ( eea ). there are no special restrictions on the underlying assets backing the transaction, with one exception, namely that underlying asset pools may not consist of credit derivatives. hence, a broad class of abss may qualify as collateral, both residential - and commercial - backed securities, all sorts of consumer credit backed abss, cash - flow collateralised loan obligations ( clos ) and cdos. overall the volume of eligible abss constitutes approximately 60 % of the entire outstanding european securitisation market. as regards the developments in the use of collateral since the start of the turmoil ( see chart 4 ), they show clearly that counterparties have made active use of the leeway the collateral framework provides. quite understandably, they have economised on the use of central government bonds, which has been often almost the only collateral counterparties could still use in interbank repo markets. instead they have brought forward less liquid collateral to the eurosystem, including abss, for which primary and secondary markets have basically dried up. the annual average share of asset - backed securities pledged as collateral increased to 16 percent in 2007