, banking supervisors would have to impose penalties which would lead to the financial difficulties being even bigger. furthermore, the market is to be informed of this for the purpose of strengthening market discipline. it is, above all, this envisaged sanction - so it seems to me - which meets with considerable reservations on the part of many institutions and supervisory authorities. i am quite doubtful whether institutions would be prepared to go that far in terms of disclosure. at the risk of exaggeration, and relating to the concept of the bank as a whole, the pre - commitment approach represents a bank ’ s promise that it will not become insolvent. if that promise cannot be kept, it will remain an open question - at least in critical cases - whether the supervisors can or will impose sanctions. a proposal by the g - 30, which goes further than the pre - commitment approach, amounts to leaving supervision and the development of regulatory strategies basically to the market or to a small group of major international financial institutions. the involvement of supervised institutions in the development of regulatory standards is not new in principle. it has been tried and tested. whenever certain methods have become state of the art, supervisors have always been ready to adopt such standards as binding - as was latterly the case for the recognition of internal models for market risks. nevertheless, there may be problems, for example, if there are no administrative sanctions to enforce the standards. how binding would they be? trusting solely in an effective market control, pre - supposes a comparatively high degree of transparency. as in the case of the pre - commitment approach, it appears to be questionable whether all the market players would be prepared to disclose their risk positions and losses to the market, for example. that would simultaneously mean them revealing market expectations, trading strategies and other business secrets. furthermore, it would not be greatly surprising if the interests of this select group of institutions were not identical with the general interests of the financial industry. in particular, there is the possibility of competitive distortions at the expense of smaller institutions. as mentioned above, the possibility of supervisory standards, including voluntary self - regulatory standards in the private sector, causing new competitive problems should at all events be avoided. v as concepts, the pre - commitment approach and self - regulation as proposed by the g - 30 can indeed supply important and thought - provoking ideas. given the present prudential standard, the advantages of these alternative concepts consist, for example, in a reduction of the regulatory burden and

the system ’ s resilience and, with that, its stability. especially with basel iii there have been concerns that the increased capital requirements will have a potentially negative impact on economic performance. however, studies have revealed that these fears are not well - founded. in anticipation of the new rules banks have already started to increase their capital. additionally, the transition period before the new requirements fully enter into force has been set with a long horizon. these are clear signs that policy - makers have found the right balance between regulation for stability and ensuring strong and sustainable growth. in fact, there is no inherent conflict between the g20 agenda ’ s objectives of a more stable financial system and of strong, sustainable and balanced growth. what we have to be careful with is public debt. the ( sadly ) new feature of the current crisis has been its third phase, the debt crisis, which hit us hard in may 2010. towards the end of 2009, investors and rating agencies were increasingly turning their attention to the financial risks that the government sector worldwide had already incurred or was likely to incur. the default risk of these countries ’ government debt securities had until then been considered safe. however, with deteriorating public debt through fiscal programmes and guarantees to financial institutions in particular as rescue measures, the default risk was revalued on a more differentiated basis. as a result, intra - euro - area yield spreads widened significantly – especially to the detriment, above all, of periphery countries like greece, ireland and portugal. although this third phase of the crisis has so far not impacted significantly on euroarea economic developments, and financial markets have continued to recover, too, the bis central bankers ’ speeches sovereign debt crisis still poses a serious challenge for the euro area as a whole that needs to be resolved before it potentially becomes a more serious threat to the recovery. policymakers have already taken important first steps in this regard, both to embark on ambitious and timely consolidation as well as to strengthen the institutional framework within the eu. keywords in this context are a strengthened stability and growth pact, better enforcement measures to correct excessive macroeconomic imbalances and a crisis resolution mechanism that helps to deal with future crises but does not undermine the incentives to rein in public deficits. 4. conclusion ladies and gentlemen, the major drivers of growth for the world economy have not been impaired by the financial crisis. emerging markets are still undertaking great efforts to catch up, and technological progress will continue. as i pointed out, even the regulatory