. the need for such a macro - prudential framework overlay is justified by the fact that different countries are at different stages of the cycle within europe, potentially facing different types of systemic risk. authorities therefore need a certain degree of national discretion to calibrate the given set of macro - prudential policy instruments to their specific cyclical situation, i. e. to address the time dimension of systemic risk. there are also significant differences in the structural importance of the financial sector or the size of the banking sector relative to gdp across eu countries, which may translate into different levels of systemic risk at a given point in time. authorities may thus need appropriate tools with which to address the crosssectional dimension of systemic risks as well. however, given that regulations are directly applicable and member states cannot modify them or add provisions unless this is explicitly provided for in the regulation itself, i am of the view that the establishment of a general macro - prudential regime in the capital requirement regulation is warranted. this macro - prudential regime should have three main features : first, adjustments should only be possible in the direction of strengthening the harmonised minima. second, and as mentioned earlier, only calibrations should be subject to upward adjustment. definitions should be maintained, thus respecting the principle of an eu rulebook. third, this macro - prudential regime should be subject to strict safeguards, under the ex ante coordination of the esrb. the purpose of this coordination before new calibrations are introduced by individual countries is to guard against possible unintended consequences and spillover effects. these safeguards could include the identification of the macro - prudential concerns in the respective countries and confirmation by the esrb. deviations should be subject to close monitoring by the esrb as well as to disclosure requirements. finally, when the macro - prudential concerns cease to exist, the calibrations should return to the harmonised minimum in the eu rulebook. this should provide macro - prudential authorities with the flexibility required to preserve financial stability while including safeguards against adverse side - effects on other countries and, ultimately, possible impairments of the single market for financial services in the eu. more generally, let me highlight that, while most of the arguments put forward against a more stringent national calibration tend to stress the potential trade - offs between financial integration and financial stability, this may not always be the case. the occasional introduction of more stringently

– considered the cornerstone of the global regulatory reform for banks and endorsed by the g20 leaders last year – already includes some elements of a macro - prudential toolkit. indeed, the counter - cyclical capital buffer can be considered as a predominantly macro - prudential tool. the capital buffer will be built up in periods of excessive credit growth and released in stress situations, thus introducing a counter - cyclical element in financial regulation. other elements of a macro - prudential toolkit fall primarily in the domain of what is traditionally micro - prudential supervision. we have capital and liquidity rules which aim to mitigate risks at the level of individual institutions, but which could, in principle, be recalibrated to address macro - prudential concerns as well. with the aim of implementing basel iii, the european commission recently published a rulebook, known as “ crd iv ”. this includes a proposal for two new legal acts : a directive, which needs to be implemented in each member state, with provisions on the authorisation and supervision of credit institutions and investment firms ; and a regulation laying down the prudential standards which will have direct application across the eu. recently, concerns have been raised with regard to the ability of authorities to use microprudential tools for macro - prudential purposes if the capital and liquidity rules are introduced as a directly applicable regulation in the eu. this would imply not only a minimum but also a “ maximum harmonisation ” of prudential requirements, in that a country could adopt neither more nor less stringent implementations of the policy instruments. the maximum harmonisation approach aims to ensure a consistent implementation of prudential measures in the single market. it ensures that a level playing field for financial institutions will be established through a single rulebook, thus avoiding regulatory arbitrage and distortions to competition. furthermore, the harmonised rules also support financial integration and improve transparency. finally, this approach also reduces regulatory costs as well as banks ’ compliance costs. given the substantial benefits of greater financial bis central bankers ’ speeches integration, the ecb has consistently supported the “ single rulebook ” approach for financial regulation, with the aim of promoting the smooth functioning of the single market. at the same time, however, let me underline that, for financial stability reasons, it is desirable that national authorities have the possibility to impose a more stringent calibration of capital requirements and a few other requirements than those proposed in the regulation