macro policy ii : getting granular ”, imf staff discussion note, 13 / 03. the set of core instruments includes the countercyclical bank capital buffer, envisioned in the basel iii regulation ; changes in sectoral risk weights, a tool recently assigned to the uk financial policy committee ; limits on loan - to - value, on debt - to - income ratios ; and so on. the scope of the instruments can be very narrow, to the point that one may question whether they are really macroprudential in nature. for example, in korea ltv limits were envisaged for mortgages in specific areas of seoul, where real - estate conditions were considered speculative. see d. igan and h. kang ( 2011 ), “ do loan - to - value and debt - to - income limits work? evidence from korea ”, imf working paper 11 / 297. bis central bankers ’ speeches to be more prone to two related problems : circumvention / elusion and leakages / waterbed effects. circumvention / elusion occurs when the agents to which the policy measure is directed find ways to mitigate or even neutralize it. leakages / waterbed effects arise when the agents to which the measure is directed are fully affected, but other sectors are also affected and adjust their behaviour so as to contain the impact of the measures. due to these effects, map policy can at best lose effectiveness ; at worst, it can exacerbate imbalances in parts of the system. circumvention / elusion. macroprudential tools and policies are prone to circumvention, but this is also true of most regulation. is there anything that makes map tools different? two remarks are in order. first, the problem of circumvention tends to be more acute when map measures are targeted. a few examples may help to clarify this claim. first, consider the case of ltv limits on mortgages. faced with these limits, banks may use alternative products, such as personal loans, to expand their real - estate exposure beyond the established limits, reducing the measure ’ s effectiveness. similarly, intermediaries may circumvent sector - specific capital requirements by extending personal loans to entrepreneurs rather than to their firms, hence avoiding additional capital absorption. by the same token, borrowers may elude limits on the debt - to - income ( dti ) ratio by tapping multiple lenders,

any undue advantages or disadvantages. moreover, the ssm places a strong emphasis on transparency and accountability. it is essential that both the market and the entities under supervision have a clear view of 1 / 4 bis - central bankers'speeches our policy stances and of our supervisory process and its results. this is not only a good practice for financial authorities, it is the backbone of mutual trust and confidence. the ssm has integrated our voices and efforts, in the pursuit of the'one team spirit ', enabling us to leverage different supervisory cultures and diverse operational experiences under a unified ssm methodology. thus, the ssm has capitalized on the histories of the national supervisory authorities, guided by a shared european vision. however, as we reflect on our accomplishments, we must not rest on our laurels. the global financial landscape is continually evolving, and our european framework must evolve with it. as we chart our path forward, there are specific aspects that warrant our continuous attention and effort. first, there are the differences in national regulatory regimes : while the ssm has made significant strides in harmonizing supervisory practices across europe, we must remain committed to working on the progressive reduction of disparities between national regulatory regimes in several areas. by the same token, we are still awaiting the completion of the third pillar, the european deposit insurance scheme ( edis ). the puzzle is not yet complete, but we remain confident that we will ultimately get there. second, the sense of belonging to a single system for our resources : this is an issue that has been at the forefront of discussions, particularly with the initiation of the ssm integration project.... and challenges ahead while we take pride in our achievements, it is equally important that we address the challenges and potential vulnerabilities affecting the financial industry, calling for changes in our supervisory approach. one of the critical areas of concern pertains to the ssm's primary focus on supervising banking groups, which constitute just one facet of the broader financial landscape. however, non - bank financial intermediation, encompassing entities such as financial intermediaries, asset management firms, investment funds and payment service providers, has seen significant growth over the past decade and is strongly interconnected with the banking system. while this evolution is a positive development in terms of fostering financial integration and bolstering economic growth, it also introduces heightened risks to the financial system. increasing competition and potential spill - over effects cannot be disregarded from a