, to stand ready to respond to events that are very difficult to predict and in their nature are unique. was the financial sector, and banks in particular, too optimistic about the possibility of this kind of crisis? it is unfortunately clear that the financial sector had very mediocre risk - management in the years preceding this crisis. there was a sentiment that risks could be taken and the eventuality of their materialization was not perceived by market participants and institutions. furthermore, a number of financial instruments emerging were abnormally complex, and did not allow the final investor to be transparently informed. we were in an environment which proved to be simultaneously intransparent, complex and extremely risky. we have to be sure we are correcting all that and improving every part and parcel of global finance in the future. are bankers already prepared to be careful in the future or should the regulators impose on them that kind of behaviour? we need both. we need, of the course, the private sector to be fully aware of the risks that might emerge. it is clear that, for the private sector as a whole the crisis was a tough lesson, so they have all changed their behaviour. they have all spontaneously, under the pressure of this intense crisis, improved their risk management. they learnt their lesson the hard way. the regulators themselves have to push them in the right direction and to impose on them what they do not do spontaneously. it is in a way a dramatic change of culture that we have to process with the efforts of the authorities and public sector, as well as the private sector, in global finance and, therefore, the global economy. was there a threat of a new great depression? what we had in 2008 and 2009 was a crisis which was graver than the worst crisis since world war ii. if we had not been prompt and bold in the constituency of central banks and executive branches we would probably have had to cope with the worst crisis since world war i. we would probably have a depression, a very profound depression at global level. the threat was grave and immediate. that is one of the reasons why we have to be sure that we have much more solid and resilient global finance and global economy. is the euro area economy in worst shape than the us economy? is the us recovering faster? each economy has its own features, its own characteristics, its own structures. when you compare figures you have also to take into consideration a significant difference which is due to difference in demographics that are

as the share of household wealth managed by professional asset managers increases, raises the need for good governance, more financial education, and transparency. there is a crucial need for adequate information to households. recent developments in financial markets support the view that households may not be a position to make informed choices owing to a lack of financial sophistication. they do not fully grasp the risks inherent to their investment decisions, even more so, if these investments have medium to long - term horizon. most households today simply do not have the time, skill or the access to the relevant information in order to manage themselves their long - term savings. they depend on professional asset management for these purposes. however, the interaction between sophisticated asset managers and financially unsophisticated households has its own risks ( for both sides ) – requiring supervision and consumer protection in order to avert contagion and reputation effects. the role of private pension funds in financial markets let me now turn to the role of pension funds in the financial system and their interactions with and implications for monetary policy : from a monetary policy viewpoint, given the interactions between financial market developments and monetary policy decision - making it is important to monitor and understand the factors driving the structures of the financial system. furthermore, a well - functioning, liquid and deep financial market is essential for central banks as it better ensures that high quality information about economic fundamentals can be extracted from financial market prices. owing to the fact that pension funds are stable long - term investors with sophisticated investment strategies implies that they potentially play an important role in the shaping of the financial market. hence, the growing importance of pension funds, as illustrated in the strong growth of pension fund assets, is therefore likely to enhance the efficiency, depth and liquidity of the financial markets. this may contribute to improving the functioning of the financial system and, in turn, may foster a smoother transmission of monetary policy. in this light, it may be useful to briefly dwell on the recent trends in terms of pension fund investment structures measured by the allocation of financial assets. chart ii thus illustrates that bills and bonds issued by the public and private sectors is the predominant asset class constituting around 39 % of total pension fund assets in 2006. however, the importance of bonds as an investment class has been waning somewhat in recent years reflecting a reallocation of pension fund assets towards allocations in shares and investment funds. especially, pension funds ’ investment in mutual funds increased markedly over the past years : from 8 % of total