reluctant ( as indicated in my january 2011 speech ) to endorse further accumulation of indebtedness of the state in order to recapitalise the banks to insulate the financial system and the economy against tail risks. even if external insurance was not available, direct injection of the capital from external sources would have been a much better solution. however ( as has been seen again with the case of spain ) this was simply not on offer, limiting the possibility for decoupling the pressures of the banking system from those of the sovereign. global upward pressures have increased the amount of capital banks are expected to maintain as both market participants and regulators reassess the uncertainty and volatility surrounding bank asset valuations. and it ’ s not just a question of ratios : upgraded regulatory requirements will soon disallow some elements of what used to be counted as capital, placing further upward pressure. for ireland, the agreement with the troika requires irish guaranteed banks to hold sufficient capital not only to meet the crd ( international regulatory requirements ), but to have enough to absorb prospective losses over the period 2012 – 2014, based on the independent calculations of blackrock solutions, and the cost of selling - off non - core assets sufficient to bring the loan - to - deposit ratios of the banks back into a plausible range ( not more than 122½ % ), and to maintain the higher threshold of 10½ % capital ( even excluding elements of capital that are not regarded as “ core tier 1 ” ) in the base case scenario. this is what determined the additional capital requirements announced in march 2012. our assessment of the capital needs of the banks will evolve over the coming years. as i stressed here eighteen months ago, loan - loss projections following a big bust involve an irreducibly large element of uncertainty. at the central bank, we continue to research the determinants of loan losses. economic conditions ( including house prices ) facing the borrowing firms and households are not the only determinants. as we have been stressing in other fora, the effectiveness of the banks ’ engagement with their stressed borrowers, as well as the legislative and administrative framework for dealing with insolvency ( details of which are being announced by the government today ) are important factors. it should not be thought a paradox that a more engaged and holistic approach by banks, and a less rigid and costly insolvency framework can help reduce loan losses over time. meanwhile, given the final view of

” sets out three transparency practices which are critical to the setting of policy objectives. they are 1. clear specification of the processes for formulating and reporting monetary policy decisions ; 2. public availability of information on monetary policies ; 3. accountability and assurances of integrity by the central bank. this formal presentation of the bank ’ s annual operations and the publication of its audited accounts is in keeping with these requirements. the bank also proposes to set out a list of objectives at the beginning of each financial year as contained in its annual report which will guide its operations for the ensuing year. these objectives will be derived from the following : 1. the scope of the eccb agreement ; 2. the past decisions and directives of the council ; 3. an analysis of the economic policies of member governments ; 4. the perceived sentiments of the public ; 5. the independent research and analysis of the bank. arising from these reviews the five ( 5 ) major operational objectives of the bank have been identified as follows : 1. monetary stability as represented by the maintenance of the external and domestic value of the currency ; 2. financial stability as represented by the safety and soundness of the banking and financial system ; 3. the development of money and capital markets as represented by the creation of new currency union wide financial markets, products, and institutions ; 4. the regulation of money and credit to provide short, medium and long term finance at the appropriate prices, volumes and maturities ; 5. the active promotion of economic development through policy research and advocacy. a review of the year 2003 / 2004 shows that the total assets of the bank grew from ec $ 1, 617 billion in march 2003 to ec $ 1, 740 billion in march 2004 with foreign reserve assets moving from ec $ 1, 455 billion to ec $ 1, 576 over the same period. the currency backing was at 97. 65 % as at 31 march 2004, which represented 8. 6 months of imports of goods and services. currency in circulation increased from ec $ 478 million in march 2003 to ec $ 532 million in march 2004. the currency maintained its value at 2. 7 to the us dollar. the rate of inflation in the currency union averaged 1. 8 % during the year. the commercial banking system remained stable with total assets of ec $ 13, 889. 6 million as at the end of april 2004, total deposits of ec $ 11, 049. 1 million, and total loans of ec $ 7, 67