of the main jurisdictions which first implemented basel ii and basel ii. 5, and remains committed to promptly implementing basel iii, which i consider as a cornerstone of the g20 reform agenda. timely and consistent implementation of the new regulatory standards as well as uniform assessment of the implementation process based on common evaluation standards around the globe are crucial for strengthening the resilience of financial systems and restoring confidence in markets. delayed implementation of basel ii. 5 and basel iii by any major jurisdiction would weaken the incentives for financial institutions to comply and also cast serious doubt on the overall reform effort. finally, an area where, in my view, enhanced coordination is required concerns the structural measures being proposed in different jurisdictions. since recent initiatives in the us ( volcker rule ), the uk ( vickers report ) and the eu ( liikanen report, on which the european commission will now follow up ) will mainly target internationally active banks, coordination at global level in this policy area is important to ensure a level playing field and to avoid regulatory arbitrage by banks with significant cross - border activities. clearly, regulators, supervisors as well as financial institutions are facing several challenges in the years ahead both as regards policy design and implementation. there is a risk that weak economic growth and an increasing focus on domestic policy priorities can weaken the incentives and appetite for coordinated reform efforts. but well - integrated and well - regulated financial markets are needed more than ever for sustainable and stable growth, both at global and at regional level. but i ’ m confident that a successful accomplishment of the reform agenda and a consistent implementation of the policy measures will help to achieve this goal. i thank you for your attention. cpss and iosco : principles for financial market infrastructures. april 2012. bis central bankers ’ speeches

conditions are met. let me elaborate. first, we should have the appropriate policy tools to ensure that financial integration does not result in the development of opaque instruments and business activities which diminish transparency and undermine confidence in financial markets. second, we know that financial markets are prone to short - sightedness, herd behaviour and sudden changes in market sentiment which may be detrimental to financial integration and stability. it is therefore important that the incentives of managers and employees are aligned bis central bankers ’ speeches with the risks they are taking in order to ensure that the long - term viability of financial institutions is appropriately taken into account in business decisions. third, we have to prevent financial integration from leading to an excessive concentration of risks and leverage in the balance sheets of financial institutions. this may pose a risk to systemic stability. fourth, we should have the tools to mitigate the risks of contagion across institutions and jurisdictions and, should problems arise, we need to be in a position to be able to resolve ailing banks in a timely manner within an efficient framework of crisis management and resolution. finally, we have to ensure that all types of risk and all types of financial activity that may imperil financial stability and financial integration are monitored, assessed and supervised in a comprehensive way. overall, all the steps taken to enhance financial integration need to be complemented by efforts at international level to design and implement consistent policy measures that can help to strengthen the resilience of the global financial system and reduce global systemic risks. in 2009, g20 leaders agreed that all systematically important financial institutions, markets and instruments should be subject to an appropriate degree of regulation and oversight. the policy agenda has made good progress and i particularly welcome the latest financial stability board ( fsb ) report on the shadow banking industry. 1 financial integration, financial stability and monetary policy i would like to stress the importance of a well - integrated financial system for the effectiveness of the single monetary policy in the euro area. financial integration is one of the key preconditions to ensure that the ecb ’ s monetary policy stance is appropriately reflected across the euro area countries, thereby reducing heterogeneity in the monetary policy transmission mechanism. the most immediate impact of changes in key policy rates is transmitted via money markets. hence, to have a broadly homogeneous impact across banks and jurisdictions, fully integrated money markets would allow full access to markets and similar marginal costs for banks with similar creditworthiness. likewise, the integration of further wholesale funding market segments,