who is the chairman of the basel committee on banking supervision, could off hand fill the evening by elaborating over the main features of this reform. from what i gather, your efforts are bearing fruits and we may expect a final text to be hopefully endorsed by the g10 governors and the heads of banking supervisory authorities in the forthcoming weeks. the basel ii reform is of key importance. new and bold developments in the banking industry are the ultimate reason for engaging in this reform. corporate governance ; data dissemination ; fiscal transparency ; insolvency and creditor rights ; insurance supervision ; monetary and financial policy transparency ; payments systems ; and securities regulation. the ecb has expressed on various occasions its supportive stance to the new framework. the ecb was also among the first to point out the possible macro - financial implications of any banking prudential scheme, highlighting the potential procyclical effects that might be induced by any framework relying on a comprehensive real time risk analysis. these concerns have been taken into account in the final version of the new framework which aims at being neutral over the cycle. looking ahead, we have to recognise that we stand at the beginning of the road. the success of this reform will crucially hinge on a sound implementation of the new framework requiring strong co - ordinating efforts among the supervisory authorities on a global basis. with regard to the eu context, the new institutional setting based on the lamfalussy framework comprising a two - tier structure of regulatory and supervisory committees is expected to play an important role in ensuring a more uniform and flexible eu regulation and consistent implementation resulting from convergence in supervisory practices. as fourth and last area, i would like to mention crisis prevention and management. of course, the various efforts i mentioned so far should be conducive to prevent crises from happening. however, crisis prevention primarily rests with every single country with strengthened macroeconomic policies and financial systems. in that context, the experience of the past decade has highlighted the crucial importance of well - functioning domestic rules, regulations and institutions namely the legal framework, the regulatory system, the enforcement mechanisms, and authorities that shape and permit the optimal functioning of a market economy with its financial markets. this includes, in particular, central bank independence, rules for monetary policy and for fiscal policies, appropriate supervisory frameworks and authorities. there is strong evidence linking well - functioning institutions and good governance to positive economic and social outcomes. institutional factors appear to be as important as productive factor endowments or any other

world ’ s financial markets required systematic changes in the policy framework that underlies the international financial system. almost a decade later, we can say that many of these proposals have been implemented. let me now focus on four different areas, which i consider most important : the first area concerns the international institutional set - up, which, in my view, has been strengthened significantly since the 1990s. the existing international financial institutions, in particular the imf, the world bank and the bis maintained their central role in the system. but they were subject to several changes to sharpen their respective focus, to reinforce their policy advice and financial support, to enhance their transparency and accountability and to strengthen their governance. the bretton woods institutions, and particularly the imf, underwent profound changes to adapt to the new environment. in addition, new fora have been created in response to the widening of the number of actors in the global economy and the growing importance of international financial markets. the creation of the g20 in 1999 constituted in my view a decisive and highly welcomed step to reflect adequately the newly globalised economy. the g20 has turned into the international forum for appropriate dialogue and consensus building between all economies that have a systemic influence, whether industrialised, emerging, or in transition. equally important is the financial stability forum, which is the first informal grouping to fully recognise the existence of a global integrated economic and financial system. it is also the first forum to set the goal of systemic optimisation of each of the subcomponents of the system, whether it is banking surveillance, insurance surveillance, securities market control, accounting rules, good practices of public and private sectors, functioning of the major market places, governance of the ifis etc. at the regional level, the european union has established a whole universe of arrangements for co - operation that is constantly being adjusted to its changing needs and european institutions are becoming increasingly involved at the international scene, for instance with the eu - us regulatory dialogue. overall, improving the governance of the international institutions and optimising the work of the informal groupings will always remain a moving target given that these entities permanently will have to adapt to a changing environment. however, with the changes introduced in the recent years, the foundations of the international financial system have been strengthened considerably. the second area i would like to highlight regards the work to enhance transparency and promote best practices, where significant progress has been achieved in a number of fields. indeed, a wide - spread consensus has developed,