have the findings of the review that is currently underway of the processes and procedures. it would seem reasonable to me to await this before embarking on another major assessment. ladies and gentlemen, before i close, let me make a couple of brief remarks on the nexus between financial integration and financial stability. you are undoubtedly aware that only a few weeks ago, we witnessed the largest ever loss incurred by a hedge fund, 6. 4 billion us dollars, suffered by the usbased fund amaranth advisors. fortunately, there was little market disruption. i mention this, because this episode should serve as a solitary reminder that the channels through which financial innovation, development and integration can potentially affect the financial system ’ s resilience are manifold, diverse, and complex. one could expect financial integration to affect financial stability in two directions : on the one hand, there is an increased risk of contagion and a larger exposure to common shocks ; on the other hand, there are more opportunities for funding as well as for risk - sharing and risktransfer. the net effect is difficult to gauge. in my view, it is likely to be positive for the stability of the financial system. what is certain, however, is that, in the case of banking strains, the likelihood that they will remain confined within domestic borders is less in comparison with the past. therefore, it is necessary for the supervisory framework as well as for the arrangements for financial stability in the eu to be able to cope effectively with the management of a possible crisis of crossborder banking groups. these issues are a central main topic of discussion at the moment in the policy - making circles in the eu and, indeed, globally. in europe, a lot of progress has been made in clarifying the roles of, and the procedures to be followed by, the competent authorities ( central banks, banking supervisors and ministries of finance ) in crisis situations. in addition, the degree of preparedness of the authorities to manage a situation of stress can be enhanced through crisis simulation exercises. however, there are other areas, such as deposit insurance schemes and the winding - up of financial institutions, where there is room for regulatory intervention at the eu level. reflections on possible legislative proposals in this regard are underway. the general conclusion from all these observations is that any future modification to the supervisory framework should follow a holistic approach, carefully considering all the implications of any such change for all the components of the financial safety net. the stakes are indeed high, as

urged accounting standard setters to develop a single set of high - quality accounting standards. a global set of accounting standards is desirable from the perspective of both investors and regulators since it improves the comparability and transparency on a global basis. this contributes towards sounder investment decisions and thus to a more efficient allocation of resources as well as overall functioning of capital markets. moreover, the financial crisis clearly revealed the shortcomings of different accounting rules on both sides of the atlantic, as differences in rules contributed towards a lower degree of confidence in financial reporting. for all these reasons, the ecb welcomes the ongoing efforts of the accounting standard setters to achieve fully compatible, high - quality accounting standards in a direct response to the g20 request. however, we are concerned to hear that the fasb and the iasb are still far from reaching a consensus on key accounting concepts, such as the classification and measurement of financial instruments. the iasb has confirmed a “ mixed measurement model ” that measures financial instruments both at amortised cost and fair value. in contrast, the us standard setter, the fasb, is determined to move towards a “ full fair value model ”, claiming that only fair value provides decision - useful information to investors. i have already mentioned in my intervention how the financial crisis has blatantly revealed the flaws with this measurement and how in certain circumstances, namely when markets are dislocated, applying full fair value accounting to the financial statements of the banking sector raises financial stability concerns and does not provide decision - useful information to investors. just to re - emphasise, the ecb strongly opposes a full fair value approach. in this context, convergence should not come at the expense of high - quality accounting standards. finally, with regard to recent assertions made by the iasb and fasb that convergence is on track, i would like to highlight that we are not so optimistic. in this regard, putting in place a reconciliation mechanism that simply discloses figures at amortised cost and fair value for each item on the balance sheet would certainly not achieve the aim of convergence. as regards governance, which improvements do you envisage in relation to the elaboration of accounting rules? first, i would like to stress that the ecb fully supports the concept of “ independent accounting standard setting ”. in their april 2009 declaration on strengthening the financial system, when identifying the main areas of concern in the accounting area, the leaders of the g20 never challenged this concept