the treaty provisions. indeed, further work is needed to clarify and optimise the details of the institutional framework for the esrb as well as for the new european supervisory authorities for micro - prudential supervision. sound institutional arrangements are a crucial pre - condition for the effectiveness of these supervisory reforms in general and the establishment of the risk board in particular. in this context, let me mention two key elements to be defined by the forthcoming legislation. one is the arrangements for the exchange of micro - prudential information among national supervisors, the new european supervisory authorities and the esrb ( subject to specific confidentiality agreements ). in order for the esrb to perform its functions, it should have the power to request any information it deems necessary ( for example, exposures of large and complex financial institutions to structured products ). 3 the other key element is that a risk warning needs to be translated into appropriate supervisory action. an institutional mechanism should exist to ensure that the recommendations adopted by the esrb as regards the actions to address the systemic risks identified by the macro - prudential assessment would be followed up by the competent national authorities. however, as the recommendations will not be binding, there should be institutional mechanisms to ensure that they are implemented. and if they are not implemented, an explanation has to be provided. the esrb may decide to make the recommendations public. as the recommendations aim to address systemic risks, their publication will increase pressure on the member state to implement such recommendations. a peer review mechanism should be set up. in particular, the ecb, on behalf of the risk board, would closely monitor the implementation of the recommendations by member states and national authorities. cases of non - compliance could be reported to the council and, where relevant, to the european supervisory authorities for appropriate follow - up. 2. the concept of systemic risk and its analysis by the esrb how well this institutional framework will enable the esrb to perform its tasks will depend on its understanding of systemic risk, the amount of relevant information at its disposal, the analytical tools that are available to assess the risks, and the framework used to distil the this was, for example, a clear conclusion of the de larosiere report ( 2009 ), “ high - level group on financial supervision in europe ”, brussels. most important results from all these elements. let me comment on some of these four aspects and touch on how we intend to fulfil our mandate to support the esrb. conceptual issues

affecting international markets. third, recent events highlighted shortcomings in banks ’ valuation practices that were relying to a large extent on market prices, thus being particularly vulnerable to any disruptions to market functioning. moreover, disclosure of information on risk exposures and valuations, including those related to structured products and off - balance sheet vehicles, proved to be opaque and very diverse in terms of breadth and detail. improving transparency and valuation practices has been considered a top priority, as a sound transparency framework based on enhanced disclosures, high - quality accounting standards and robust valuation practices is crucial for market confidence and effective market discipline. fourth, the current financial stability framework has been assessed both in terms of its effectiveness in identifying and preventing the occurrence of disturbances that impact financial stability ( i. e. its role in crisis prevention ) as well as in terms of effectively monitoring and addressing the risks and vulnerabilities that rise during the turmoil ( i. e. in crisis management ). while it can be argued that the financial stability framework, has performed relatively well – for instance in the field of crisis management and in light of the recent initiatives i have already mentioned, there is a need for a more broad, frequent and timely exchange of information as well as a strengthened cooperation and coordination between competent authorities. turning to the policy response of public authorities, let me recall that since the early days of the financial market turmoil, public authorities at the international, european and national level have been very active in developing measures aiming at rebuilding confidence in and enhancing the resilience of the financial system. at the european level, the ecofin roadmap defines the actions to be taken by authorities through the course of 2008 and beyond, while at the international level consistent policy initiatives have been developed under the auspices of the financial stability forum. let me make a brief reference to measures that are currently being developed and are expected to be implemented in the medium term. first, enhancing risk management practices is of pivotal importance. in this context, strengthening the capital treatment of structured credit and securitisation activities, mitigating the build - up of excessive exposures and risk concentrations and revising banks'stress testing practices both in the context of liquidity and credit risk management are some of the areas where work is currently underway., i would like to welcome the development of guidelines by the industry ( such as the reports of the institute of international finance and the counterparty risk management policy group iii – “ corrigan report ” ) and stress the cong