board to avoid conflicts between pillar 3 and the broader accounting standards. in fact, the committee views pillar 3 as a further refinement of the accounting standards that apply to banks ’ specific exposures. because we recognise that we have much to do in this area, we will continue to monitor accounting and market developments in the light of pillar 3. our dialogue with accounting standards - setting bodies and the accounting profession will continue to grow in the years to come. v. conclusion this morning, i have shared some of my views on the need for risk management and supervision to evolve together and to reinforce each other. all of us recognise that both areas must keep pace with changes in accounting practices, and i think you would agree that the work we have to undertake in all three areas - risk management, supervision, and accounting - is quite demanding. to develop new ways of thinking about risk and about the techniques for measuring it, we will require hard research and significant resources. we must gather and pour over large amounts of data to sharpen our understanding of various risks and their relationships to each other. we must dedicate our talent, staff, and indeed funds to undertake this work. i would argue that is equally demanding to develop a supervisory structure that capitalises on and further encourages those advances, especially when we are trying to implement a shared framework across many jurisdictions. but the benefits are many. on a microeconomic level, the virtuous circle i have described should help individual firms to improve the quality of their controls in the short run and strengthen their competitiveness in the long run. yet supervisors are especially motivated by the benefits we expect at the macro level. we believe that, when all financial institutions have the right incentives to pursue profits responsibly, the financial services sector becomes better managed, more resilient, and better able to serve as a source for sustainable growth for the economy. attaining that promise of greater financial stability is a challenge that is worthy of all of our talent, of our time, and of our hard work. with that, i would like to thank you for welcoming me to your conference. i offer my best wishes for fruitful and thought - provoking discussions.

environment and to trigger productive investment, which continues to show signs of weakness in the euro area as a whole. in the more medium term, the combination of negative demographics, low productivity growth and high levels of public and private debt constrains the euro area ’ s ability to regain precrisis growth rates, creating a breeding ground for disillusionment with and distrust of the european project. it is, therefore, essential that governments revive the reform momentum, to optimise the working of production factors and product markets, improve the business environment and complete the euro area governance framework. important labour market reforms have been undertaken in recent years, especially in the countries hardest hit by the crisis. empirical evidence shows the positive impact that those reforms have had on growth and employment. but preventing high unemployment rates from becoming entrenched and long - term unemployment from growing remain a priority. where least progress is perceived is perhaps in reform of the product and service markets. recent experience shows that it is important to implement the reform agenda in the right order, since early reforms, tending to enhance competition, may be vital to ensure that labour market reforms have the desired positive effects. bis central bankers ’ speeches in various euro area countries, product market reforms should aim to improve the business environment, remove administrative barriers and increase competition. revamped insolvency proceedings would help to improve management of the loan write - offs that currently place such a heavy burden on banks ’ balance sheets. insolvency proceedings, if well designed, can be an efficient way to reallocate resources to sectors and firms that offer higher growth potential. in the case of services, european commission studies suggest that full implementation of the services directive would deliver significant productivity gains and growth potential. efficiency gains may also be achieved through the creation of a single energy market. regarding the free movement of persons, we should be aware of the risk of the spread of an uncoordinated response that may ultimately fragment the schengen area. the introduction of reforms and deepening of the single market are clearly crucial to achieve the structural convergence needed to improve the functioning of the euro area and make further progress towards a more robust monetary union. our aim is to achieve sustainable activity and a recovery in employment, while maintaining the essential bases of the welfare state which is naturally one of the pillars of the construction of europe. clearly the result of the referendum held on 23 june in the united kingdom is a major setback along that road, with consequences for the