but also against the background of an unfavourable global environment. at the same time they have striven hard to narrow the gap in living standards between themselves and the euro area member countries. it is, therefore, important that in the examination that follows a country ’ s request for a convergence report due consideration be given to the policy consistency and credibility of the applicant country. a comprehensive economic analysis that is not only quantitative but also qualitative, and which recognizes the difficultly of simultaneously satisfying all the maastricht criteria in the current world environment would encourage emu candidate countries to persist in their efforts to achieve even closer nominal and real convergence. it would also provide further evidence that the euro project is credible, that it is both feasible and realizable in a near - term perspective. let me conclude by thanking you again for being here to contribute to a deeper understanding of the challenges ahead. i also wish you a pleasant stay in our country.

michael c bonello : nexus of basel ii and financial stability speech by mr michael c bonello, governor of the central bank of malta, at the annual seminar of the institute of financial services ( ifs ), floriana, 14 may 2010. * * * i would first like to thank the institute for inviting me to their annual seminar, which this year focuses on the topical, but complex subject of risk, capital and financial stability after the financial crisis. my remarks will concentrate on the lessons learned and on some open questions being addressed by international standard setters. in the introduction to his recent book “ good value ”, stephen green, the group chairman of hsbc holdings plc, recalls his thoughts one day in april 2008 on the shores of lake como against the background of an unfolding global financial crisis. he describes that time as one of those moments in history when it seems as if the tectonic plates are shifting, striking at the roots of what we had taken for granted for a quarter of a century. in his words, “ there has been a massive breakdown of trust : trust in the financial system, trust in bankers, trust in business, trust in business leaders, trust in politicians, trust in the media, trust in the whole process of globalization – all have been severely damaged, in rich countries and in poor countries alike. ” when i had addressed your annual dinner in november of that same year i expressed the view that the crisis would not be over until confidence and trust were restored and the credit channel started to function again. we are not there yet. we are still confronted by the farreaching consequences of the sub - prime episode, which now include a full - blown sovereign debt crisis. it is now clear that risks had been building up over a number of years. some derived from the fact that corporate governance, risk management, market infrastructures for derivative products as well as supervisory practices and regulatory frameworks had not kept pace with the process of financial innovation. others have been associated with an overly accommodative monetary policy at the global level, particularly in the united states. there is no doubt, however, that financial regulation and supervision proved inadequate. the initial trigger of the crisis was the securitisation of sub - prime mortgages and the associated originate and distribute model. these products found ready buyers, but there were significant misaligned incentives underlying the model. there were manifest conflicts of interest, originators and brokers had limited interest in ensuring continued monitoring