can never fully predict how bank failure will play out, a plan with no flexibility is not a good plan. here, crisis simulation exercises are a key tool for developing flexibility. conclusion summing up, my three main messages this morning are : first, cooperation. cooperation between resolution authorities, but also with other authorities like dgs ’ s, supervisory authorities and ministries, is key to promote an effective and consistent resolution regime. second, preparation. although practice will be different from planning, we can boost the chances of successful resolution action if we step up crisis preparation, while maintaining a flexible approach. this will also decrease the legal risk of resolution actions. finally, to establish a strong resolution regime : we need to persist in our endeavours. it takes time and perseverance to overcome hesitation or reluctance, which is still present at some banks and authorities. yet we also need to keep up our collective efforts if we really want to minimise the impact of bank failures on the real economy and society as a whole. it is fitting that the word “ resolution ” can also mean “ will power ”, or “ determination ”. because these are exactly the qualities we need to overcome doubts in the sector and get everyone on board. i am sure today will produce some valuable insights which will help us all gain a deeper understanding of how we approach resolution in our respective jurisdictions. and of course, this understanding will only serve to strengthen our collective approach. thank you!

basel ii has only been fully implemented in europe since the beginning of this year. the us is rolling it out more slowly. even so, there is already strong agreement that basel ii will improve incentives for risk management and market disclosure and enhance capital regulation and supervision. let me point out some key enhancements relevant to the current crisis. among other things, basel ii will deliver better risk differentiation. banks that enter upon more risky lending practices will need to strengthen their capital base accordingly. moreover, under the new capital regime all exposures will be subject to regulatory capital charges, whether on or off the balance sheet. basel ii will also create more neutral incentives between retaining exposures on the balance sheet and transferring them to the capital markets through securitisations. it will reinforce capital requirements for banks ’ trading books, which are rapidly growing. and last, basel ii will enhance disclosures of banks ’ risk profiles, notably with regard to structured credit and securitisation activities. given that basel ii is a risk - sensitive framework, there is some concern that it may turn out to be too procyclical. however, to achieve more risk sensitivity in minimum capital, there has to be some fluctuation in that requirement over the cycle. the basel committee has tried to balance the objectives of risk sensitivity and capital adequacy over the cycle. for instance, banks are required to perform forward - looking stress tests to make sure that they hold enough cushions above the minimum. basel ii will also require much stronger firm - wide aggregation and management of risk exposures. and banks that take on more risk will be required to hold more capital in the first place, helping to prevent the build - up and underpricing of risk. we will also be tracking the framework over time and make any necessary adjustments based on our findings. so, it is safe to say that the basel ii framework is a major improvement. but it is not the ultimate answer to the financial markets problems of today and tomorrow. in december 2006, the basel committee had already identified “ pressure points ” and weak spots in the regulatory and supervisory regime that should be addressed. fortunately, the framework is flexible enough to evolve over time. in light of recent developments, the basel committee has already begun to evaluate certain aspects of the framework. these include issues such as the securitisation of complex products, reputational risk and disclosure. but strong capital, though essential, is only one aspect of a stable banking and financial system. sound risk