and implementing regulation is being closely coordinated ; – fourth, we have put in place cross - border oversight and contingency planning for the largest and most complex global financial institutions, each of which now have functioning core supervisory colleges and crisis management groups. at the level of the essential regulatory policies to buttress financial stability, let me recall : – that with basel iii, we have a fundamentally revised global bank capital framework which will establish stronger protection through improved risk coverage, more and higher quality capital, a counter - cyclical buffer and a constraint on the build - up of banking sector leverage ; – second, as part of basel iii, we will for the first time have a global liquidity standard for banks that will promote higher liquidity buffers and constrain the maturity mismatching that created the condition for this crisis ; – third, as i will describe later, we are making progress in developing a policy framework and tools to roll back the moral hazard risks posed by institutions that are tbtf ; – fourth, we have eliminated the perverse incentives that pervaded securitization, including the scope for leverage to develop in opaque off - balance sheet vehicles through changes to accounting standards and regulatory and prudential rules ; – fifth, we are establishing central clearing of standardised contracts in the otc derivatives markets and a otc global trade repository is now in operation ; – fifth, we have developed a series of supervisory tools to raise standards of governance, risk management and capital conservation at financial institutions. in this context, let me note that : we are making good progress with accounting standard setters towards expected loss provisioning regime for credit losses, which will dampen procyclicality and align accounting and prudential objectives in this key area ; and principles and standards have been issued to better align compensation systems with prudent risk - taking. the standards give supervisors powers to restrain compensation structures and the level of pay - out to conserve capital in the firm. as we move to raise capital levels, we will encourage supervisors to use these powers. i have been selective in my enumeration. but the point i want to leave with you is that we should not underestimate what has been accomplished. each of the above areas are difficult in their own right. that we have been able to progress global policy development and implementation on such a broad front, while fighting a very serious financial crisis, is something that has never happened before. so, the direction in which we are moving

have the power to require changes to a firm ’ s structure to improve its resolvability. second, the loss absorption capacity of systemic firms should reflect their role in the global financial system and their potential contribution to systemic risk. even with the best possible resolution tools, the failure of a major global firm would cause significant damage. this reinforces the importance of strengthening the resilience of major global firms. higher loss absorption capacity for sifis than the minimum agreed basel iii standards, especially for the largest globally operating sifis, therefore are at the core of our recommendations. a credible process of peer review will be established to challenge the policy choices made within each jurisdiction and to ensure that measures applied on a country - by - country and sifi - by - sifi basis are consistent and mutually supportive. the third area is strengthened oversight and supervision. senior line supervisors have drawn a frank assessment of weakness leading up to this crisis. these weaknesses were not present in equal amounts everywhere, but there is scope for improvements all around. our recommendations in this area have been developed with the imf. one set is focused on the mandates, independence and resourcing of supervisors. another is on improved methods and practices to proactively identify and address risks. fourth, we will be setting out higher robustness standards for core financial infrastructure. these infrastructures – including for central counterparties – are themselves sources of systemic risk were they to malfunction or fail. this is a complex project which will unfold over a number of years. it will need to be consistently implemented in all major countries to maintain a level playing field, avoid regulatory arbitrage and effectively address the risks to the overall system. the already established fsb framework of country and thematic peer reviewing process will address improved resolution frameworks and more intensive supervision in addition for sifis with the potential to create damages at a global level we will establish a mutual policy review process that will review and challenge the national policies towards major global sifis. ahead of us, other issues still require attention : – so far, most of our attention has been on strengthening the resilience of the banking system, and rightly so. yet, the shadow banking sector remains a large part of our financial systems, less regulated, but nonetheless significant in the credit intermediation and maturity transformation, and subject to runs in damaging ways. – we need to make frameworks for macro - prudential policies and systemwide oversight operational. we will