jean - claude trichet : global capital – surrender of national policies? lessons from the recent events in credit markets speech by mr jean - claude trichet, president of the european central bank, at the 17th frankfurt european banking congress “ global capital – threat or salvation? ”, frankfurt am main, 23 november 2007. * * * ladies and gentlemen, let me start off with one general remark : the present significant market correction with episodes of turbulences should not come as a surprise to us. the ecb, as well as the other central banks, has issued warnings in the past on the global phenomenon of under - pricing of risks. in many respects the present episode can be interpreted as bringing to the forefront anomalies and structural deficiencies which we have identified earlier. while it is too early to make a full assessment, i believe there are some first provisional lessons which can already be drawn at the current stage. a lesson that can be drawn is that the growing complexity of instruments has to be monitored very closely. structured credit markets are exposed to valuation problems, which make the market very vulnerable to a shift in investor sentiment. in the absence of reliable market prices, instruments need to be valued by models. but estimates which the models produce are highly sensitive to underlying assumptions. mounting losses in residential mortgage backed securities ( rmbs ) backed by us sub - prime loans have seemed to trigger a wide loss of confidence in the correctness of underlying assumptions and therefore in the valuation of structured credit products more generally. this apparently has set a vicious circle in force in which heightened uncertainty about the future value of complex assets and rising risk aversion caused many investors to withdraw from the market. prices dropped massively, and investors incurred large unexpected losses, contributing to further pressure to sell. a second lesson that can be drawn is that structured credit markets provide a pressing example of the need to increase transparency in financial markets. that the market disruption spilled over into interbank markets can be explained by another key shortcoming of structured credit markets, namely the opacity of exposures of financial institutions to complex instruments and off - balance sheet vehicles. this lack of transparency about exposures of other banks exacerbated counterparty risk concerns, impairing the well functioning of interbank markets. in periods of turbulences, whatever the origin of those turbulences, opacity and absence of transparency are a recipe for propagation of turmoil and generalised contagion. third, the recent events have stressed again the particular role

eleni d dendrinou - louri : assessing the performance and regulation of the greek banking system speech by ms eleni d dendrinou - louri, deputy governor of the bank of greece, at the conference : “ the future of banking in greece : redefining the business of financial services to drive growth and expansion in 2009 and beyond ”, athens, 21 january 2010. * * * ladies and gentlemen, i would like to thank “ the banker ” and “ financial times global events ” for inviting me to participate in this conference and giving me the opportunity to address such a distinguished audience. in this intervention, i will present an overview of the greek banking sector and outline the major challenges and opportunities that greek banks face. i will finish by providing a perspective about the new regulatory framework changes proposed by the basel committee. during the current decade, the greek banking system has enjoyed a favourable macroeconomic environment, in both greece and in south eastern europe ( see ). this situation has contributed to healthy profitability, underpinned by rapid loan - portfolio growth, relatively wide net interest margins, high - yield lending to see borrowers and broadly resilient fee - income generation. these factors, in conjunction with the negligible exposure of greek banks to us subprime assets and other complex structured products, considerably mitigated the financial fallout from the first wave of the recent global financial crisis, the worst since the great depression in the 1930s. however, the greek economy and other markets where greek banks operate, notably see, have not been spared by the second round effects of the crisis. the liquidity squeeze and the asset - quality deterioration tested the greek banking system, which fared rather well in the course of the previous year ( 9months to be exact ). more precisely : greek banks ’ capital adequacy remained at satisfactory levels and was gradually strengthened ; profitability declined but remained at overall satisfactory levels ; credit risk increased and so did loan loss charges, with signs of moderation in the 3rd quarter of the year ; enhanced by ecb funding, the greek government ’ s liquidity support package, and the increase in deposit base, the liquidity position of greek banks remained satisfactory. in more detail : capital in the first 9 months of 2009, the capital adequacy of greek commercial banks and their groups was substantially enhanced. this development was attributed mainly to a considerable increase in prudential own funds, while a marginal rise was recorded in risk