perspectives on these issues. the relevance of transparency and good governance also applies at the corporate level, not least because financial difficulties in large corporations could undermine the well - being of individual financial institutions and markets. this is especially the case in small jurisdictions. now it is a fact that corporations will always know a lot more about their financial position than any outside entity charged with monitoring them, and financial intermediaries are no exception in this regard. this is particularly true at a time when the complexity of financial products and the intensity of cross - market risks are stretching the capacity of central bankers and supervisors to remain fully in control. several recent episodes in the financial world indeed confirm that the innate human predisposition to maximise selfinterest can induce behaviour that is not in harmony with the public interest. the implications of this are two - fold. while rules and regulations continue to play an important role in preventing systemic shocks, they will increasingly have to incorporate incentives and credible deterrents to discourage excessive risk - taking and moral hazard. second, the efforts of central bankers and supervisors need to be supplemented with direct oversight by the stakeholders of financial institutions themselves, be they shareholders, creditors or customers. stated otherwise, good governance and market discipline are becoming at least as important as prudential controls for the well - being of the financial system. that, in turn, calls for a host of other measures ranging from the regular disclosure by the institutions of detailed information about their performance and the adoption of international accounting standards to the enforcement of shareholder rights, the creation of deposit insurance and investor protection schemes and the simplification of judicial procedures. in this regard, i believe that dr summer will be explaining how accession countries score in terms of some of these criteria. eu financial market integration presents new opportunities but also some risks while it is recognised that the well - being of the financial system has come to depend on a host of factors, the regulatory and institutional framework in place continues to play an important role both in crisis prevention and management. the prospect of eu membership has already contributed significantly in this regard, spurring accession countries to evaluate the adequacy of the framework governing the financial sector. perhaps more important is the fact that the on - going harmonisation of rules and practices with eu standards in the area of financial stability will provide market players with an added assurance that this framework will continue to evolve in line with international best practice. this assurance should also facilitate the further development of the financial sector in these countries, as foreign

on the national implementation of the payment services directive. malta stands to gain from sepa. along with the benefits of financial market integration, increased competition and scope for innovation, there is also a strong potential to attract e - commerce payment business and payment factory operations for trans - national corporations. investing in sepa should not, therefore, be viewed as an expense, but rather as a business opportunity that will help banks pre - empt competition law problems, reduce costs and expand in new markets. in time, it may also come to offer new and profitable services, such as e - invoicing and reconciliation. for this to happen, the banks must see to it that their customers understand the advantages offered by sepa and make use of it. the financial crisis has also highlighted the importance of stress tests, which assess an institution ’ s ability to withstand both institution - specific credit and liquidity risks as well as systemic risks, including adverse macroeconomic conditions. as stated in the bank ’ s financial stability report, the latest stress test results show that the banks generally have adequate capital buffers and sufficient liquidity to withstand extreme, yet plausible shocks. the tests carried out by the bank should, however, be complemented by parallel tests conducted by individual institutions. in particular, banks should make an in - depth, bottom - up assessment of the potential implications of critical events to identify potential weaknesses at an early stage so as to be in a position to take early corrective measures. this would also serve to reduce the pro - cyclicality of such measures. in recognition of the need for a strong risk management framework, the central bank of malta, in cooperation with the mfsa, has been working with a number of banks on their contingency funding plans and stress testing capacity. a new supervisory regime the lessons that are emerging from the financial crisis will almost certainly change the shape of financial regulation and supervision as we know it. the globalisation of financial institutions and markets, and the associated interdependencies, imply that a regime that has only a narrow institutional and geographic focus will prove inadequate. there is now a heightened recognition of the importance of the macro - prudential dimension of supervision and of the need to have mechanisms in place to address systemic risks, within and across national borders. in this regard, the recommendations contained in the de larosiere report constitute an excellent basis for action. the report distinguishes between micro - prudential supervision ( the supervision of individual institutions ) and macro -