and on the last by the middle of next year. a comprehensive impact study and the calibration of the overall capital level will be undertaken by end - 2010, looking at the cumulative effect of all the reforms and how they interact. in other words, there will be no simplistic layering of the different elements. the changes to basel ii will be substantial, and they will be phased in over an extended period so as avoid any adverse interaction with current conditions. • regulation is being substantially enhanced on bank liquidity as well. the basel committee will issue for comment early next year a new minimum liquidity standard directed at ensuring global banks hold sufficient high - quality liquid assets to withstand a stressed funding scenario specified by supervisors. this too will be subject to an impact assessment. • on compensation, countries are taking actions to implement the fsb standards issued in pittsburgh and others will be following shortly. these standards address the structure and governance of compensation ; they also call on firms – on public policy and prudential grounds – to restrict compensation levels so long as this is needed to retain and build the necessary level of capital. this is an area in which it is absolutely essential that authorities take robust collective steps if they are to dispel expectations that business can go on as usual. the fsb is now launching a review of the actions taken by authorities and firms, focusing on consistency and effectiveness at achieving the intended results, and will propose additional measures as needed. • on accounting, we have seen progress in the revamping of financial instruments accounting. but we are quite some distance from achieving the objectives of improved, converged standards that are less complex and less prone to amplifying economic cycles. this is a difficult area that we are pursuing vigorously through dialogue between the accounting standards setters, prudential regulators and other stakeholders. but we must do so in way that respects the integrity and independence of the standards setting process. • last but not least, we must reduce the moral hazard posed by institutions that are too large, or too complex, or too interconnected to fail. the large - scale support we provided in this crisis to stave off systemic collapse has materially worsened moral hazard risks. why should our financial firms now believe that authorities will not stand behind them if conditions were to turn again to the worse? moreover, many of our banks have become larger, not smaller as a result of crisis - related mergers. moral hazard risks pose a large prospective burden for taxpayers and are a serious

withholding tax vat source : state budget. ( 1 ) percentage change of the six - month moving sum with respect to the year - earlier period. bis central bankers'speeches figure 7 10 - year government bond yield differentials with respect to germany in 2009 - 11 ( basis points ) 1. 700 1. 600 1. 500 1. 400 1. 300 1. 200 1. 100 1. 000 greece portugal ireland italy spain france 1. 700 1. 600 1. 500 1. 400 1. 300 1. 200 1. 100 1. 000 jan. feb. mar. apr. may june july aug. sep. oct. nov. dec. jan. feb. mar. apr. may june july aug. sep. oct. nov. dec. jan. feb. mar. apr. may junejuly aug. sep. oct. nov. dec. france greece italy ireland spain portugal ( 1 ) updated to 6 december 2011. figure 8 10 - year government bond yield differentials with respect to germany in 2011 ( basis points ) 1, 700 1, 600 1, 500 1, 400 1, 300 1, 200 1, 100 1, 000 greece portugal ireland italy spain france jan. feb. mar. apr. may june july aug. sept. oct. nov. dec. france greece italy ireland spain portugal ( 1 ) updated to 6 december 2011. bis central bankers'speeches 1, 700 1, 600 1, 500 1, 400 1, 300 1, 200 1, 100 1, 000 figure 9 average cost of the debt, average gross interest rate on bots, and gross yield on 10 - year btps ( percentages ) 10. 0 10. 0 8. 0 8. 0 6. 0 6. 0 4. 0 4. 0 2. 0 2. 0 0. 0 0. 0 average cost of the debt average gross interest rate on bots gross yield on 10 - year btps ( 1 ) updated to 30 november 2011. bis central bankers'speeches