the necessary data by calculating rwa based on the standardised approach. now the analysis will focus on the question of whether, and why, rwa based on the banks ’ internal models differ from those based on the model - independent standardised approach. differences must be well explained and have a sound economic rationale. if the analysis does not reveal any substantial and inexplicable differences, this would strengthen the credibility of the model - based approach. conversely, if substantial differences cannot be explained, corrective measures would need to be considered. domestically focused commercial banks i would now like to turn to the domestically focused commercial banks. in 2013, these banks further increased their already high exposure to mortgage and real estate market risk. first, growth in domestically focused banks ’ mortgage lending was almost unchanged from the previous year. by contrast, the big banks ’ lending growth decreased significantly in 2013. second, domestically focused banks ’ risk appetite in mortgage lending remained high overall. while there has been a decline in the share of new mortgage loans with a high loanto - value ( ltv ) ratio since the last financial stability report, no trend towards lower affordability risks is discernible. third, they continued to carry a historically high level of interest rate risk in the banking book. as a result, these banks are particularly vulnerable to adverse scenarios which assume a significant interest rate increase coupled with a price correction on the residential real estate market. while domestically focused banks ’ exposure to risk is high, their current capital ratios are also significantly above the regulatory minimum. as a consequence, substantial capital buffers are available in the system to absorb losses from negative developments in the economic and financial environment. nonetheless, from a financial stability perspective, the banks ’ high exposure to risk, coupled with the imbalances on the mortgage and real estate markets, is a source of concern. the situation calls for a prudent lending policy, both to limit banks ’ future loss potential and to help prevent a further build - up of imbalances. bis central bankers ’ speeches regarding the latter, the different measures taken thus far by the authorities appear to have had some positive impact. measures such as the revision of the self - regulation rules in july 2012 and the activation of the countercyclical capital buffer ( ccb ) in early 2013, which contributed to strengthening banking sector resilience, seem to have helped contain market momentum. nonetheless, imbalances built up further in 2013, thereby justifying the increase in the level

guy quaden : efficiency and stability in an evolving financial system opening address by mr guy quaden, governor of the national bank of belgium, at the national bank of belgium conference on efficiency and stability in an evolving financial system, brussels, 17 and 18 may 2004. * * * ladies and gentlemen, i am pleased to welcome you at the third biannual international conference organised by the national bank of belgium. this year's subject is “ efficiency and stability in an evolving financial system ”. the topic is of the utmost importance not only to central banks but also to all economic agents. indeed, the efficiency and stability of the financial system is a prerequisite for the optimal allocation of capital over different sectors, for adequate risk - sharing across agents and ultimately for economic growth and stability. central banks have a particular interest in the maintenance of an efficient and resilient financial system, because it ensures the effective implementation of monetary policy and thus contributes to meeting the final objective of price stability, and to promoting high sustainable growth. over the past decade our financial systems have been going through major changes. those developments raise new questions and face central banks and other bodies having supervisory and regulatory powers with new challenges. in order to provide an appropriate response to these new and changing circumstances, policymakers should have a detailed knowledge of the ongoing processes and apply adequate theoretical models and insights to support their decisions. this conference combines keynote lectures by internationally distinguished researchers with the research effort of 6 belgian teams, 4 academic teams and 2 teams from within the bank. a selected group of international experts, with a broad research experience in financial issues, will act as discussants of these research papers. their comments will be the start of a discussion i would like all of you to participate in. we hope that this conference, offering central bankers, academic researchers and financial experts the opportunity to exchange ideas, will contribute to our understanding of the ongoing changes. major changes having taken place in our financial environment over the last five to ten years have been the introduction of the euro and european financial integration, the global financial liberalisation and the rapid development of new financial products, the consolidation in the banking industry and new technologies for producing financial services. the introduction of the euro has removed one of the main factors of financial segmentation across eurozone countries, namely the multiplicity of currencies. thereby, it has reduced the vulnerability of the financial and real sectors to exchange rate shocks. the resulting financial integration has proved to be impressive in the securities markets.