taking place in the risk tolerance of the central as it continues operating in a financial crisis when other market participants have long adopted a very conservative approach. at a time when all risk measures ( probabilities of default of collateral issuers and counterparties, correlations, expected loss, var - measures ) have gone up dramatically and financial institutions are cutting credit lines and are increasing margin requirements in the interbank market, the central bank becomes the lender of last resort. in such a situation its risk taking increases considerably. this suggests that the management of the central bank ’ s risk exposures is even more important in a crisis and requires, at least then, a very carefully designed risk management framework. credit assessment in the eurosystem the experience of the financial crisis has led the eurosystem to solidify the already elaborate credit risk assessment framework it uses in its credit operations. let me now give you some more information on the way the eurosystem handles credit risk assessment in the context of its own credit operations. as you are probably aware, article 18. 1 of the statute of the escb requires that all credit operations conducted by the ecb and the national central banks ( ncbs ) should be based on adequate collateral. in particular all such collateral must meet high credit standards. the eurosystem has defined an elaborate framework of credit assessment ( the european credit assessment framework – ecaf ) to ensure that such standards are met. in the assessment of the credit standard of eligible assets, the eurosystem takes into account credit assessment information from credit assessment systems belonging to different sources. some of them are private, namely external credit assessment institutions ( ecais ), counterparties ’ internal ratings based ( irb ) systems and third - party providers ’ rating tools ( rts ). others are public, namely the national central banks ’ in - house credit assessment systems ( icass ), additionally, in the assessment of the credit standard, the eurosystem basel committee on banking supervision : the joint forum : stocktaking on the use of credit ratings. takes into account institutional criteria and features guaranteeing similar protection for the instrument holder such as guarantees. the performance of all credit assessment systems that are accepted by the eurosystem is closely monitored. on an annual basis the observed default rate for the set of all eligible debtors assessed by a particular system is compared to the credit quality threshold set by the eurosystem. this way, the results from credit assessments are comparable across systems and sources. with

same way. but each needs to be able to respond as necessary. otherwise, we risk widening asymmetries and exiting this crisis with greater economic divergence. this underscores why a common european fiscal response is so desirable. first, it will help bridge the gap for member states and counter that risk of divergence. given the fiscal needs already on the horizon, it needs to be swift, sizeable and symmetrical. second, it will help guide us towards the europe we want to build after the crisis. we have been given a chance to take a leap forward : to reimagine our social contract, reconsider europe ’ s strategic autonomy, and recognise the risks of not taking the environment seriously. these are all areas where acting together is in our common interest. let me give just one example : we have now experienced the consequences of a systemic ecological crisis, and we are also likely to face a period of weak private investment as firms repair their balance sheets. public investment will have to fill the gap. it makes sense to use this opening to accelerate the transition to a green economy and hit our climate targets. the recovery presents a further opportunity, too : to engage citizens in the process of defining our common interest and the areas where europe should be stronger. in sum : this is our generation ’ s “ schuman moment ”. we have been passed the baton of european integration. we are seeing our de facto solidarity all around us. and we are being asked to act, as those before us did, by strengthening europe in response. i am confident that we will recognise our historical responsibility and rise to the challenge. 2 / 2 bis central bankers'speeches