necessary analysis and research to bring our understanding of systemic risk and macro - prudential regulation to a new level, and to find common languages and frameworks. third, in addition to improving the analytical tools supporting risk surveillance and risk assessment, more detailed and accurate information – to back up esrb risk warnings – is essential. it should include better data coverage of non - regulated financial sectors, as well as more granular information on key node - institutions in the financial system and on potential inter - linkages between them. the ability to formulate concrete policy recommendations, as opposed to general recommendations, depends greatly on access to critical information. finally, risk warnings and recommendations made by the esrb have to be translated into concrete action, in particular by the national supervisory authorities. to conclude, the european systemic risk board can be compared to a doctor who examines a patient, asking him about his ailment and suggesting that some tests be done. the doctor then makes a diagnosis and eventually recommends some medicines. it ’ s up to the patient to abide by the doctor ’ s recommendation. the doctor is not in a position to take direct action. he is not allowed to intervene, even when things get really bad, as in the case of a risk of contagion and the patient has to be put in quarantine. he might be the best doctor in the world, but his treatment will only be as good as the quality and completeness of the patient ’ s replies – and the patient ’ s willingness to take the medicines prescribed. this is the way in which the esrb has been constructed in europe. its success will largely depend on the compliance of its “ patients ”, who hopefully have learned the lessons of this crisis. thank you for your attention.

a more comprehensive information base, the crisis has led to a significant revamping of research into systemic risk and to greater input into the formulation of related policy recommendations. as i just mentioned, in addition to improvements in macro stress - testing techniques and the early warning signal literature, more attention is being paid to contagion and spill - over models, especially for the banking sector, to macro - financial risk - based flow - of - funds approach using contingent claims analysis, and to research tools to support regulatory and supervisory policy recommendations. one area in which a pre - crisis esrb could have made a difference is in the conduct of country - specific analysis. generally, ecb financial stability assessments focus on the euro area as a whole and rarely make distinctions between euro area countries. they mainly consider the risks and vulnerabilities common to most euro area countries ; there is little analysis, let alone formulation, of policy recommendations, at country level. while this helps to distil the elements of the analysis relevant to the euro zone, country - specific vulnerabilities might end up receiving insufficient attention. the esrb will have a clear mandate to pursue country analysis and to provide countryspecific policy recommendations if deemed necessary. if a task of this kind had been carried out by an independent and impartial body before the crisis, it could have signalled growing vulnerabilities in eu countries. risk warnings about fragilities related to foreign currency lending, about particularly highly leveraged sectors in some countries, or overvaluation in a number of eu housing markets could have been louder. i would add, though, that none of these elements triggered the financial crisis – rather, they intensified it as the crisis spread to the eu financial system. the crisis also calls for improved coordination and cooperation between the international bodies responsible for safeguarding financial stability at all levels of the analysis. cooperation between the esrb, the financial stability board and the imf, for example, will probably be fruitful in the future, helping to raise awareness of growing vulnerabilities at global level that could not surface as prominently in an eu - focused financial stability surveillance exercise. cooperation in the risk detection and risk assessment tasks would involve, for example, sharing of technical expertise and of findings from market and policy intelligence efforts. in addition, the esrb may use these international bodies as a sounding board for its risk assessments, risk warnings and policy recommendations. an esrb with an eu - wide focus established prior to