##s. moreover, guidance is warranted by auditors and supervisors with the aim of enhancing the clarity and robustness of structured product valuations, particularly in relation to illiquid assets. second, credit rating agencies, whilst eliminating conflicts of interest, should take measures to expand the scope of information provided to investors – thus facilitating their exercise of due diligence, while improving governance and rating methodologies. if their endeavours will not prove to be adequate, public policy action would need to be considered. third, supervisors should ensure that banks retain adequate capital and liquidity buffers. in this context, work is underway to refine certain aspects of the capital adequacy framework, especially in relation to the treatment of securitisation and off - balance sheet exposures. moreover, further supervisory guidance needs to be developed for liquidity risk, incorporating the lessons from the turmoil and focusing on liquidity stress - testing and contingency funding plans. these are three examples of areas where very important progress should be made. more generally, i would call for a further significant change of culture at the national, european and global level. i would sum up this cultural change with two words : transparency and anticyclicality. “ transparency ” because enhanced public information on financial instruments, on markets and on institutions is not only necessary to permit market participants to take optimal economic decisions, but is also the only way we have of avoiding contagion, herd - behaviour and, therefore, the propagation of turbulences in times of difficulty. and “ anti - cyclicality ” because a large number of rules, regulations and procedures have a tendency to foster behaviour that is largely procyclical, amplifying the booms as well the busts in the cycle. we must look at all parts of global finance with a view to diminishing progressively their procyclical components, which implies, in particular but certainly not exclusively, eliminating to the greatest possible extent asymmetry in the treatment of booms and busts and, where necessary, extending as far as possible the time - horizon adopted by all the institutions concerned. i am now at your disposal for questions.

jean - claude trichet : hearing before the economic and monetary affairs committee of the european parliament speech by mr jean - claude trichet, president of the european central bank, at a hearing before the economic and monetary affairs committee of the european parliament, brussels, 26 march 2008. * * * madame la presidente, mesdames et messieurs les membres de la commission economique et monetaire, je me rejouis d'apparaitre devant votre commission aujourd'hui et de poursuivre notre dialogue regulier. je commencerai mon intervention par une evaluation de la situation economique et monetaire, en expliquant les raisons sous - jacentes a nos recentes decisions de taux. ensuite, je vous donnerai de plus amples explications sur la distinction operee par la bce entre la definition de notre politique monetaire d ’ une part, et la preservation du bon fonctionnement du marche monetaire d ’ autre part. zum abschluss mochte ich einige vorlaufige schlussfolgerungen fur die regulierung, aufsicht und stabilitat der finanzmarkte ziehen. economic and monetary developments since my previous appearance before the european parliament in mid december, inflation has remained at relatively high levels of above 3 %. the incoming information has confirmed our assessment of prevailing upside risks to price stability over the medium term, in a context of continued vigorous money and credit growth. strong upward pressure on inflation in the short term mainly stems from the recent increases in energy and food prices. looking ahead, the inflation rate is expected to remain significantly above 2 % for most of the year. hence the period of relatively high inflation rates will be more protracted than previously expected. the march 2008 ecb staff macroeconomic projections foresee hicp inflation to range between 2. 6 % and 3. 2 % in 2008, and between 1. 5 % and 2. 7 % in 2009. these projected ranges have shifted upwards, mainly as a result of higher food and energy prices. i should stress that the staff projections are based on a number of purely technical assumptions which are unrelated to policy intentions, such as the use of market expectations in the assumptions for short - term interest rates. in the view of the governing council, risks