. moreover, questions have been raised about the actions of banks, which might have been able to benefit from incentives to develop new models that tended to reduce the risk calculated and, therefore, the capital consumed. and this not to mention the doubts raised about supervisors ’ capacity to validate increasingly more complex models. in sum, the validity of risk - adjusted capital ratios as a measure of banks ’ solvency has, in some cases, been questioned, along with the usefulness of this metric to compare the relative position of each bank. to illustrate this problem we can cite certain analyses published in 2012 which concluded that around half of all investors did not believe banks ’ rwa figures, while 80 % considered that the risk measurement framework should be simplified in order to be more credible. the basel committee conducted various studies attempting to cast light on this matter. work on the credit and market risk areas was carried out. while this type of study should be viewed with all due caution, it is worth recalling some of the conclusions reached. 4 / 7 for instance, according to a study by the committee published in july 2013, when different banks applied their own internal models to a single portfolio selected for the purposes of the study, there was seen to be high variation among the resulting rwas. only a portion of this variation was due to genuine factors, i. e. to risk factors, and to methodological differences permitted by the supervisors ( and which were, therefore, in principle, acceptable or relevant differences ). what was most interesting, or worrying, depending on one ’ s standpoint, was the fact that 25 % of the variation could not be explained by either of the factors i have just mentioned. market criticism and doubts, combined with the findings of the studies, led the basel committee to launch a far - reaching internal debate. at the risk of excessive simplification, at one extreme are those who have lost confidence in banks ’ capacity to properly use their own models, and also in supervisors ’ ability to validate and oversee increasingly complex models. and at the other extreme are those who consider that the evidence available is not sufficiently conclusive as to do away with internal models, since, from their standpoint, the differences in rwas would essentially be in response to the different levels of risk assumed under different business models. in our view at the banco de espana, risk sensitivity should continue to be at the heart of the capital framework : if a bank assumes more risk, more regulatory capital should be required of

the expected - loss model may be criticised as being judgemental and as allowing a considerable degree of subjectivity, it nonetheless has the advantage of being more forward - looking and, therefore, less pro - cyclical. furthermore, the ecb welcomes the maystadt report on how to reinforce the eu ’ s contribution to the ifrs and to the improvement of the governance of the european institutions developing these standards. the ecb broadly supports the enhanced role of public authorities in the new board of the european financial reporting advisory group ( efrag ), which would contribute towards ensuring that financial stability and public interest considerations are adequately taken into account in the endorsement process for ifrs. the need for taking into account financial stability considerations in the process of setting accounting standards is an issue that has long been championed by the ecb. in our view, enhancing the role of public authorities in this process is conducive towards achieving that bis central bankers ’ speeches goal, and would, through an increased interaction between standard setters and regulators, contribute to taking financial stability considerations into account in a more pronounced way in accounting standard - setting. the presentations of the first session of this conference will shed light on these issues and provide you with information on the latest developments in this area. the second part of this conference deals with the interaction between financial reporting and financial regulation. as you are aware, the ecb has been entrusted with the responsibility for banking supervision in europe within the framework of the ssm. the ssm will provide for the aforementioned “ single supervisory model ”, which will be applicable to all banks in the euro area. in the future, other eu countries may also decide to participate in the ssm. the ecb / ssm will formally take over supervision in november 2014. it is being designed to solve the “ financial trilemma ” 1 created by the unstable co - existence of national supervision, financial integration and financial stability by moving supervision to the european level. the ecb / ssm ’ s currently on - going comprehensive assessment exercise covers 128 banks that represent 85 % of the total assets of the euro area banking sector. the exercise, which is to be concluded ahead of the operational start of the ssm, will contribute to greater transparency of the banks ’ balance sheets. moving forward, the ssm will ensure consistency of supervisory practices in europe. it will lead to a harmonised treatment of non - performing exposures and provisioning rules, which varies between jurisdictions at present and is not directly