, it may well be a rather gradual process, although i would not rule out that this time it may well evolve faster than historical experience might suggest. as a consequence, european policymakers will have to recognise that this newly found global importance also brings with it new responsibilities and challenges. europe can and should be a strong advocate of a functioning world economy. this entails a credible commitment to trade and capital account liberalisation. while it is not for me to comment on the eu stance with regard to the forthcoming millennium round on trade liberalisation, it is obvious that it is in the interests of the european union that the various international organisations devoted to the management of the world economy function smoothly. given its economic and financial weight, the eu should play a constructive role in, inter alia, the world trade organisation ( wto ), the international monetary fund ( imf ) and the group of seven ( g7 ). as for the eurosystem, the institutional changes brought about by emu have made it possible for the first time for europeans to speak with one voice on monetary and financial matters. as the president of the ecb, i participate in parts of the g7 meetings ; the ecb will be represented at the newly established g20, and we also enjoy observer status at the imf. in addition, we are to become a shareholder of the bank for international settlements ( bis ). the eurosystem considers the various fora for international cooperation as important instruments for managing the increasing trend towards globalised economy and finance. the high degree of international capital mobility and technological advances have created interdependencies which call for new forms of global “ governance ”. in this vein, we support efforts to improve the international financial system and to enhance the transparency of financial institutions as proposed, inter alia, by the imf, to coordinate the work of banking supervisors as advocated by the bank for international settlements, and to work towards greater systemic stability with emerging countries as instituted by the g20. as already mentioned above, emu is set to propel the eu economy into a role of systemic importance. assuming this new responsibility for the stability of the international financial system as a whole, however, should not be misinterpreted as a move towards managing exchange rates between the world ’ s three leading currencies. in our view, exchange rates are primarily the outcome of current and expected monetary, fiscal and structural policies as well as cyclical and other economic developments, rather than

to the bank ’ s most recently published data, it increased its holdings of loss - absorbing capital by roughly three - quarters in the second half of 2012. in addition to retaining profits, this increase is mainly attributable to the capital measures announced in july, which have already been implemented to a large extent. in addition, as part of their strategic reorientation, both big banks announced measures which will further enhance their resilience. for instance, both institutions are planning to further expand their loss - absorbing capital, to reduce their risks and, in particular, trim their balance sheets as well as to pursue a policy of dividend restraint. the national bank welcomes the increase in the big banks ’ resilience achieved thus far, as well as the announced measures to further improve their capital situation. the consistent bis central bankers ’ speeches implementation of these measures is important for two reasons : first, leverage has remained high despite the improvement in the capital situation. second, the risks in the environment – and thus the associated potential losses for the big banks in the event of a further escalation of the european debt crisis – remain considerable. situation at domestically focused banks i would now like to turn to the situation at domestically focused banks. the risks associated with the environment in which these banks operate increased during the past six months. indeed, the isolated signs of a slowdown of growth in the mortgage and real estate markets observed in the second quarter did not materialise in the third quarter. in particular, prices in the different segments of the residential real estate market continued to rise at a sustained pace. at the same time, growth in the mortgage loan volume was still considerably higher than gdp growth. imbalances have therefore grown. as far as risk appetite and capitalisation are concerned, the situation of domestically focused banks has not changed significantly during the last six months. on the one hand, banks ’ risk appetite has not diminished overall. this is substantiated by the following : first, in the case of new mortgage loans, both the loan - to - value ratios and loan - toincome ratios have remained at a high level. second, interest rate risk has not declined and remains high. third, the already low margins on interest income have continued to decrease. there are nevertheless considerable differences from one bank to another, in particular as to how their risk appetite has evolved. certain banks have reduced their risk - taking significantly during the last quarters, while others have increased their exposure to risk