precisely stand today in improving regulation and oversight? • at their meetings in november 2008 and april 2009, heads of states of the g20 countries have agreed on what are the most important challenges for improving regulation and oversight : ( i ) strengthening transparency and accountability, ( ii ) enhancing sound regulation, ( iii ) promoting integrity in financial markets, ( iv ) reinforcing international cooperation and ( v ) reforming the international financial institutions. • overall, improvements in accounting, capital regulation and macro - prudential supervision feature high on the agenda. the leaders of the g20 called on the imf and fsb ( financial stability board ) to produce guidelines on how national authorities can assess the systemic importance of financial institutions, markets, or instruments. • over the past months good progress has been made in the various areas and the momentum needs to be maintained to establish a sound regulatory framework. work has been completed on a number of issues ( e. g. enhancements of basel ii, as mentioned below ) while other areas still need more consideration before they will be finalised by the end of 2009 or at the beginning of 2010. • the basel committee on banking supervision ( bcbs ), which is the driving force regarding initiatives in the area of micro - prudential regulation, issued in july 2009 a final package with measures to improve the basel ii framework. • on accounting the iasb ( international accounting standards board ) is taking various initiatives and shows openness to collaboration with regulatory authorities. a couple of important projects are under way. • but significant challenges remain. again : international bodies and governments must not lose momentum in their efforts to strengthen financial regulation and supervision. all the aforementioned issues equally deserve due consideration and should be addressed as a matter of urgency. the world economy after the crisis the crisis is not over yet. however, it is worthwhile discussing some preliminary reflections about the world after the crisis. • first, beyond these regulatory and supervisory challenges, a successful crisis resolution will also impinge on economic structures world wide. the global growth model of the last 15 years has failed. we have seen an exceptionally long period of strong growth in the world economy, but that growth was based on large and unsustainable global imbalances. for growth to be sustained, it must be more broadly balanced, both geographically and across economic sectors. • second, the current crisis may dampen economic growth in the future, reduce growth in the capital stock and thereby lead to a prolonged reduction in the level of output

all of this should contribute to making public finances in the euro area credibly robust. the ecb welcomes this outcome. as regards the euro area crisis management instruments, we welcome the decisions of the heads of state or government of the euro area to strengthen the efsf and the esm in a number of areas. first, there is now greater flexibility in the euro area crisis mechanisms to act as backstops, thanks to the decision to accelerate the entry into force of the european stability mechanism, esm, to july 2012 and for the european financial stability facility, efsf, to remain active in financing programmes that have started until mid - 2013. second, the clarification that as regards private sector involvement, the euro area will adhere to established imf practice is also helpful in reassuring investors. third, the decision to include an emergency procedure into the voting rules of the esm1 is essential for effective decision making procedure, especially in crisis situations. as regards the efsf, the governing council of the ecb has decided that the ecb will be able to act as agent for the efsf in its market operations. the ecb – probably supported by a number of national central banks – will make its technical infrastructure and know - how available to the efsf. the technical and legal preparations have started and we hope to complete them in january. iii. credit rating agencies the activities of credit rating agencies, notably in relation to sovereigns as well as the efsf, have lately occupied centre stage in the debate in europe. calls for better regulation have become louder. against this background, the commission ’ s recent legislative proposals on credit rating agencies, which the ecb broadly supports, is also discussed by this committee. credit ratings have a direct impact on the market functioning and the wider economy. a sound and robust framework must thus be created. this framework should be geared towards the following objectives : to reduce market volatility ; to enhance the quality of rating process ; and to restore market confidence. the two issues that are of particular importance are, first, the assurance of appropriate underlying methodologies and the transparency of ratings ; and second, the reduction of hardwiring of ratings in legislation and market practices. ratings simplify complex risk assessments. but they should only be one of several inputs for investors. in particular, they should be no substitute for financial institutions and other investors to carry out their own assessment. this is the main step towards avoiding mechanistic