##s, exchanges, and clearing systems all have huge stakes in containing their risks as individual agents and risks to the system as a whole. private market participants can discourage excessive risk taking by choosing to do business with those firms that demonstrate sound risk management systems and portfolios that balance appropriately risk and expected return. if private markets are going to perform their risk control functions, then market prices must send the right signals to all participants about the risks and rewards of a particular transaction or at a given firm. in order to improve the ability of market prices to accurately reflect risks and returns, i believe that we should take action ourselves and encourage action by others in at least three areas. first, we should seek ways of improving the transparency of financial institutions and markets. as we all know, full information is a fundamental requirement of free and competitive markets. more particularly, financial institutions and individual investors must be well informed about their own and their counterparties ’ exposures, the nature of new financial instruments, and the extent of overall market liquidity. i believe that banks and other financial institutions could significantly improve their disclosures by providing more information to the market about their risk management policies and practices and about the values of internal risk measures. at present, the market seems to grant great weight to bank regulatory capital ratios that are only crude indicators of an institution ’ s risk profile. that attention is driven in large part by the fact that these regulatory measures provide a consistent basis for comparison. the regulatory and financial communities should work together to identify more meaningful statistics to meet the market ’ s needs. at the international level much work is being done, and much remains. one of the key lessons of our most recent financial crises is that international accounting and public disclosure standards are often inadequate. an important step forward was the publication last november by the international basle committee on banking supervision of guidelines for enhancing bank transparency. that report provides guidance to banks and banking supervisors around the world on the nature of core disclosures that should be provided to the public. much more, however, should be done to provide the public and supervisors with the information they need to exert effective market discipline. a second area where we could improve market discipline is in affecting how market participants view what has come to be known as the too - big - to - fail problem. in this regard, i would emphasize that the fdic improvement act of 1991, or fdicia, contains rather tough language about too - big - to - fail – language that i assure you the

stability. ” 11 the financial market, that is, is a fundamental mechanism of our economies ; but it is not an abstract concept. in the real world it appears as a complex infrastructure developed through a laborious process, with a set of well - specified rules of the game and the need for an attentive and vigilant supervisory system. in the same lecture tommaso returned to another recurrent theme of his, the need to move beyond the level of the “ nation state ” – in this case in order not to leave “ the rapid emerging reality of global finance ” unmanaged. and to the improvement of international cooperation and the reform of the international monetary system he devoted his last days, through the group that he convened with michael camdessus and alexandre lamfalussy – what is now called the “ palais - royal initiative ”. 12 to conclude, tommaso padoa - schioppa was a true leader, a man with whom it was always instructive to engage in a conversation, but at your own risk – always with the assignment, that is, be it explicit or implicit, of producing a concrete, real - world result. his professional life may well be compared to the work of a creative and passionate architect. he was not, and he did not pretend to be, “ always right ”. but, like the builders of the medieval cathedrals that enrich europe, he was a “ man of vision, ” a believer but also a very practical man. he was loyal to the institutions which he served but no slavish follower of received tradition. he contributed substantially, through his example, his writings, his actions, to the advancement of our society. he worked tirelessly and effectively for a better country, a better europe, a better world than the one into which he was born. “ markets and government before, during and after the 2007 – 20xx crisis ”, per jacobsson lecture, basel, 27 june 2010. palais - royal initiative, “ reforming the international monetary system. a cooperative approach for the twenty first century ”, paris, january 18, 2011. bis central bankers ’ speeches