not considered a scenario of a ‘ hard ’ brexit with no transition period. more work is required to be prepared for this plausible scenario. with regard to brexit related authorisations and approvals, we will continue to prioritise our authorisation activity and continue to deliver on our commitment of being transparent, predictable and consistent in our approach to authorisations and material business changes. where brexit has a material impact on business strategy and business models, we will challenge firms to ensure they appropriately address associated risks. we will continue to both operate to and influence european norms of supervision. we have engaged effectively within the ssm and with the esas and have been influential in the decisions being taken on supervisory stances for the many thorny issues that brexit is causing. we will continue to dedicate our most senior and experienced supervisory and regulatory experts to work on brexit – as befits one of our highest priorities. we have approved an expansion in the regulatory staff in the central bank to ensure we have the resources to both authorise and supervise new entrants or changes to existing firms. we have put in processes that are transparent, predictable and consistent. firms that are engaging with us will find us open, engaged and pragmatic. but they will not find that we are willing to compromise on the need for governance and control arrangements to be commensurate with the size, scale and complexity of operations. ( iii ) meaningful progress in the recoverability and resolvability of firms there has been significant progress in recovery and resolution planning in the last two to three years. however, more needs to be done by regulated firms to develop credible and executable recovery plans, and to address impediments to resolution – including the raising of mrel for banks, and addressing operational continuity issues. the absence of a resolution framework for insurance firms is a concern, and will be a focus of our engagement in european forums. ( iv ) continuing to enhance our supervisory approach 5 / 7 bis central bankers'speeches i expect all of you to be seeking to both continuously improve your firms as well as responding and anticipating the changing environment we operate in. i expect the same in the central bank. we will continue to enhance our supervisory approach, including the use of the data and analysis ( reflecting the huge growth in regulatory and non - regulatory information that we need to consider as part of our supervision ). ( v ) resourcing and finally, res

by requiring credit institutions to disclose appropriate risk information, allowing the market to reward well - managed and well - capitalized credit institutions. let me now turn to some implications of basel ii for the stability of the banking sector. to successfully implement basel ii, greek banks will need to further improve their risk measurement and management systems and to develop their contingency planning. this will enable them to react more promptly and effectively to disturbances affecting their risk profile. in addition, the bank of greece, in its stability assessment, will utilize the output of the banks ’ improved internal systems to undertake more timely and accurate estimates of the total impact of alternative stress scenarios on the risk exposures and capital adequacy of the banking sector. therefore, it will be in a better position to evaluate the sector ’ s overall resilience. it has been argued that basel ii is likely to produce a procyclical effect. according to this line of reasoning, for banks using the irb approach, capital requirements for credit risk will increase during cyclical downturns because of a deterioration in the quality of loan portfolios and, conversely, decrease during cyclical upturns. as a result, bank capital adequacy will deteriorate during downturns, given the difficulty of raising new capital in such conditions. consequently, banks will be under pressure to restrict their lending during downturns, while during upturns they will tend to unduly expand it. it should be kept in mind, however, that bank lending is likely to be pro - cyclical to some degree, irrespective of the supervisory framework. yet, the possible additional pro - cyclical effect arising from the irb approach can be mitigated. in the context of pillar ii, supervisors should insist that banks hold capital comfortably above minimum requirements under normal conditions and also require banks to conduct rigorous stress tests in order to assess the adequacy of capital buffers. in addition, it would be advisable to encourage banks to adopt a more forward - looking through - the - cycle approach in their credit quality assessments and in their provisioning policy. at present, even the more sophisticated greek banks tend to employ only a point - in - time approach to determine the values of the main credit risk parameters. in its consultation document regarding the minimum requirements for the internal rating systems, the bank of greece has announced that, although it will accept point in time systems, it encourages banks to incorporate the effects of