cooperation between the esrb and the european system of financial supervision ( esfs ), comprised of the three european supervisory authorities. this should ensure the appropriate interplay at the eu level between the macroand micro - prudential levels. the esrb is also expected to liaise with global institutions. in line with the commission communication, the esrb will need to set up arrangements for close collaboration with the imf, the financial stability board ( fsb ) and third country counterparts. this liaison with external counterparts is expected to help the esrb identify and better assess risks stemming from outside the eu at an earlier stage than would otherwise be the case. it is evident from the envisaged activities of the esrb that its work will be wide - ranging and complex. it is the task of the ecb to assist this new body in performing its duties. according to the council conclusions, the ecb will provide analytical, statistical, administrative and logistical support to the esrb. in particular, the ecb will assist the esrb in the development and collection of new statistical data of relevance to the esrb on a regular basis. the ecb will also assist the esrb by developing and maintaining new analytical tools and methodologies for the identification and assessment of systemic risks and the issuance of early risk warnings, so that the esrb effectively performs its tasks. this task poses important challenges because the identification and assessment of systemic risks require special skills and the further development of analytical tools. models must be developed to help structure and analyse the vast amount of information collected for the risk assessment. each model has its pros and cons, and serves different purposes. as financial stability and macro - prudential analyses are less developed than those in other policy areas, it is advisable to employ a multiplicity of approaches. v. concluding remarks in conclusion, i would like to stress four points : first, the ecb tasks related to its contribution to safeguarding financial stability are compatible with its monetary policy framework for achieving its primary objective of price stability. indeed, the ecb ’ s monetary policy strategy is very well suited for the potential use of the interest rate instrument in order to “ lean against the wind ” of financial market excesses, in a manner consistent with the preservation of price stability over the medium and longer term. second, the establishment of the esrb and the attribution of macro - prudential tasks to the ecb will strengthen the ecb ’ s capacity (

ago. it may harbour leverage and liquidity risks that could amplify any potential shock from a reassessment of risks in financial markets. i will now look in more detail at some longer - term developments and potential risks in the asset management sector. risks associated with liquidity, leverage and interconnectedness in the investment fund sector one of the most notable developments since the financial crisis has been the rapid growth of asset management in the euro area and at global level. in the euro area, investment funds have been growing steadily, with total assets expanding by roughly 170 % between 2008 and 2017 1, reflecting both continued net cash inflows and rising asset valuations. as a result, the structure of the euro area financial sector is changing. in 2008, total assets held by investment funds were only 15 % of banking sector assets. in 2017, euro area investment fund assets had grown to 42 % of total banking sector assets, amounting to eur 12 trillion. this major growth in relative size is likely to have far - reaching implications for the ability of the financial system to absorb shocks and for the financing of the economy more broadly. on the positive side, an increase in market - based finance through the issuance of debt and equity instruments can help diversify the funding base of the real economy. it also gives investors more choice and enables them to benefit from diversification effects offered by investment products. this holds true for retail and institutional investors alike, as an increasing share of institutional investors are using professional asset management services. the growing share of investors outside the core financial system tends to increase the system ’ s risk - bearing capacity, as traditional end - investors, typically not leveraged, can absorb any potential losses more smoothly. one should also acknowledge that thanks to significant efforts in the last ten years, investment funds in the eu are subject to an enhanced regulatory framework. in particular, the fund specific regulation coupled with regulation covering certain activities, such as derivatives and securities financing transactions, have addressed investor protection issues and risks from a microprudential perspective. 2 at the same time, the growing fund sector is creating emerging vulnerabilities from a systemwide perspective. 3 the asset management sector is highly connected with other parts of the financial system 2 / 7 bis central bankers'speeches through ownership links, common asset exposures and the provision of wholesale funding to banks. investment funds are not only important depositors in banks ; they also provide longerterm funding through the purchase of bank - issued