excessive risk taking, loose underwriting standards, and asset overvaluations, all of which have in the absence of timely effective actions laid the seeds for crises. second, the limitations in regulatory arrangements, including the capital adequacy framework, contributed to the growth of unregulated exposures, excessive risk - taking and weak liquidity risk management. third, weaknesses in the application of accounting standards and the shortcomings associated with the valuation and financial reporting of structured products played a significant role in the current turbulence through pro - cyclical valuations and lack of full disclosure of banks ’ true risk profile through the cycle. fourth, the crisis revealed the need to adapt some of the tools and practices of central banks to manage system liquidity in the light of banks ’ cross - border operations. the recent experiences have highlighted the differences in emergency liquidity frameworks of central banks, on aspects such as range of collateral, range of eligible counterparties ; and the differences in central bank practices. fifth, supervisors did not adequately address deterioration in risk management standards in the regulated entities, which did not fully reckon the risks associated with new financial instruments, and there were shortcomings in consolidated supervision. sixth, deficiencies in crisis management and bank resolution frameworks, including deposit insurance, have been observed, especially where central banks do not have a central supervisory role. seventh, the complex inter - relationship between regulation, the inappropriate accounting practices, and regulators ’ excessive dependence on external ratings may have exacerbated the market turbulence. menu of solutions the above underlying factors clearly demonstrate a need to enhance the resilience of the global system and consider some of the prescriptions that have been proffered for the consideration of the policy makers. the recent developments in the global financial markets have been closely followed by many. these include market participants, central bankers, supervisors, multilateral institutions, political leaders, analysts, academicians, and also the layman. with so much attention being focused on the ongoing turbulence, by so many stakeholders, we have a wide menu of solutions and prescriptions. i will quickly run - through some of these. first, risk management frameworks including the governance arrangements in banks and financial institutions need to be reviewed by the managements in the light of the recent experiences. second, supervisors need to play a more active role in scrutinizing the risk management practices, including stress testing and governance arrangements, off balance sheet entities and structured products.. at the same time,

to be complemented by growthenhancing structural reforms to facilitate entrepreneurial activities, the start - up of new firms and job creation. here, governments should be more ambitious. at the european level, there has been substantial progress towards reinforcing the economic governance framework. we have seen a strengthening of the fiscal rules of the stability and growth pact and the introduction of the fiscal compact, about which we spoke in the parliament last december. and we are implementing the new focus on correcting macroeconomic imbalances. the recent crisis has shown that a well - functioning emu needs not only a strong institutional set - up for monetary policy at the centre, but also one for economic policies. ensuring competitiveness of all euro area countries should be seen as a common responsibility. i am sure many of you here in the european parliament will agree that we need a change in the mindset of how national policy - making is conducted and perceived. the economic policies of euro area countries are, ultimately, domestic policies for the euro area. precisely because of spill - over effects, they must be subject to mutual surveillance, and corrected if required in the collective interest of the euro area as a whole. this should apply both to fiscal and macroeconomic policies. bis central bankers ’ speeches but surveillance alone is not sufficient. citizens also expect from europe common answers to the common challenges which all euro area countries are facing. in a context of global competition and ongoing fiscal consolidation, euro area countries should join their forces. given that they share a single currency, they have even stronger reasons than other countries to work together. this can be in the field of research and development, education or infrastructure, they should strive for cooperation as much as possible. let me add that, just like competitiveness, i see financial stability clearly as a common responsibly in a monetary union. during the crisis, we have observed strong negative spill - over effects across euro area countries and between the banking sector and its respective sovereign. national supervisors and treasuries are also confronted with the well - known problem that during good times, large banks work as european institutions but in bad times fall on national shoulders. ensuring a well - functioning emu implies strengthening banking supervision and resolution at european level. european integration has brought peace and prosperity. while i hesitate to sketch out the long - term end point of the integration process, i am convinced that we need to actively step up our reflections about the longer term vision for europe as we have done in