stability architecture. central banks should play a major role, given their interest in, and responsibility for, the stability of the financial system, as well as their analytical expertise and the information they have on the real economy, financial markets and market infrastructures. the participation of the governors of all eu central banks in the general board of the esrb, as well as the attribution of the chair to the ecb ’ s president, shows that the importance of this role has been recognised. the ecb has also been requested to provide the secretariat and the necessary analytical, statistical, logistical and administrative support. for this purpose, the ecb will optimise its existing capabilities and infrastructure in the areas of financial stability monitoring, macro - economic analysis and the collection of statistical information, to the benefit of the esrb. supervisory authorities should be involved in, and contribute to, the macro - prudential function with information, analysis and regulatory advice. the conduct of macro - prudential policies will to a large extent also depend on supervisory measures. accordingly, the macroprudential framework should provide for coordination mechanisms between macro and micro - prudential responsibilities, which should also avoid any potential overlaps or conflicts of interest. the legislation contains a number of provisions that provide the basis for a close institutional collaboration between the esrb and the esas. the provisions range from the mutual participation in the boards of the esrb and the esas – including the chair of the joint committee of the esas as second vice - chair of the esrb – to cooperative duties in the monitoring and assessment of systemic risk, the conduct of stress - tests and the sharing of information, as mentioned earlier. national supervisors will also participate in the esrb ’ s general board and will, as is important, be members of the advisory technical committee. this committee will be one of the main support structures of the esrb, together with the advisory scientific committee of independent experts. in conclusion, the establishment of the esrb will introduce a new policy function at the eu level, which has a great potential for enhancing the ability of european and national authorities to safeguard the stability of the eu ’ s financial system as a whole. the challenges of designing and implementing this new eu - wide macro - prudential policy function are considerable. however, with appropriate preparations, which are already ongoing in close cooperation with all the parties involved, a smooth start of the esrb may be envisaged in 2011.

to interact with the central bank. this holds even for the eurosystem, which has, compared with other central banks, a very large counterparty base. second, the central bank cannot provide liquidity at all maturities. it can in fact only offer a standardised range of products, while the market could display much more variation. third, the central bank treats all counterparties equally : banks obtain liquidity at uniform rates, and they can post the same collateral. in an interbank market, on the contrary, banks can vary loan rates, depending on the credit risk of the borrower. thus, there is a role for the collection of information ( or peer monitoring ) here, which serves to find the appropriate valuation of liquidity. 7 3. creating and restarting an interbank market given the benefits of an interbank market, its revival is of high importance to central banks right now. the revival of a market that once existed is quite different from setting up a completely new market. in many countries, including many of the eastern european economies, central banks supported the creation of completely new money markets. such support is helpful if the existence of such a market is beneficial to its potential users, but especially when there are obstacles to setting it up. for instance, trading on markets may be much more beneficial once a certain critical mass of trading volume is reached ; this is the concept of network externality. also, conventions may need to be agreed upon before trading picks up in a particular market segment – in the context of the interbank market i am thinking of conventions like the establishment of certain reference rates that contracts can be based upon, such as the euribor rates. finally, only sufficient technological progress may make a market viable. for instance, short - term repo markets were in the past difficult to establish because settlement was costly and time - consuming – this was much facilitated with the advent of fully computer - based real - time settlement with straight - through processing. no individual market player can have the financial resources and the incentives to pay the fixed costs needed to set up a market, although an association of private players conceivably could. the reactivation of a market is a different story and requires a different set of measures. the previously mentioned measures helped to overcome problems related to the infrastructure of markets, or the absence of conventions. these initiatives could help if there was a need by private agents to have such a market. reviving a market, on the other hand,