. prudential supervision itself will focus more sharply on the financial institutions supervised. in itself, better registration of “ true ” variability is not destabilizing ; quite the contrary. in any case consideration is being given to the idea of applying prudential “ filters ” in calculating supervisory capital that can attenuate improper volatility in the accounts due to the repercussions of fair - value accounting. c ) the transposition of the new methods the extent to which the aims are actually attained will depend on how well the banks make their preparations. but it will also depend on the adaptation of economic legislation. for banks the change will be profound, at once technical and cultural. from valuations and decisions still largely based on deterministic values, singlevalue variables and the simple “ summing up ” of individual items they will move towards widespread use of both objective and subjective probability distributions. the next step will be even more towards considering portfolios as a whole and taking account of the linkages between asset and liability values, the structure of the balance sheet and immunization strategies. it will be less and less common for overall risk to be calculated by adding up the risk of the individual components. italian banks are readying themselves. the banking groups that will use advanced internal rating methods from the outset have initiated an especially intensive interaction with the supervisory department of the bank of italy. basel 2 and ias also constitute an additional reason for adapting italian law to the needs of a modern “ regulated market economy ”. albeit in different ways and to a variable extent, three fields of economic legislation will be involved : company law, competition law and bankruptcy law. italy ’ s recent company law reform is now filtering into the concrete reality of firms and banks. the legislation on banking has been coordinated with the civil code by legislative decree 37 / 2004. the implementing regulations will follow soon. the aspects on which the bank of italy has focused in helping banks to interpret the new company law are a more general notion of equity interest, adaptation of the requisites for bank officers and above all the duties and responsibilities of the board of directors and control bodies in the traditional and new models of governance. for basel 2 and ias to have the desired effects, the independence granted to directors – notably in the revised articles 2381 and 2392 of the civil code – must be accompanied by strengthened internal and external controls on operations and accounts. in applying the legislation intended to safeguard and foster competition in banking, even

”. this afternoon the focus shifts to central bank operations from a technical perspective – presented by representatives from the european business school in oestrich - winkel. the third session begins at two o ’ clock when the frankfurt school of finance and management will analyse in more detail “ current and international challenges ” faced by central banks. frankfurt is the ideal place to promote central banker education – and not just because of its geographic location in the heart of europe. as the home of two central bank ’ s, the deutsche bundesbank and the european central bank, frankfurt lives and breathes the single currency. but what does this mean for education? central banks produce knowledge in such wide - ranging areas of central banking as monetary policy, cash management and payments. however, practical knowledge is mainly only available and applicable within central banks, which is only to be expected because central bank operations are very different from those of a “ normal ” bank. for the bundesbank, as the “ bank of banks ”, this also has an impact on recruitment channels. the bundesbank thus provides training programmes for all career paths as it is generally not so easy to find a sufficient level of central bank knowledge on the market. for us, this means that knowledge has to be transferred internally. for instance, we bring in many of our employees from a wide variety of business areas to teach at the bundesbank ’ s own university of applied sciences in hachenburg, where we train the next generation of our central bankers. it is of particular importance to us to communicate practical experience ; as the german writer wolfgang eschker once said “ practically speaking, we can save ourselves a lot of theory ”. it is precisely just the financial crisis that has shown us that it can be necessary, even in such a sensitive environment as central banking, to roll up our sleeves and face new challenges with a hands - on, goal - oriented approach. we believe that on - the - job further training is essential and, once again, we call almost exclusively on the services of our own internal specialists. after all, we have to ensure that our members of staff are kept up - to - date with the latest knowledge and that they have the opportunity to develop their soft skills. there are many factors behind the constant changes and increasing complexity and thus growing requirements : political decisions, such as establishing monetary union, the advance of globalisation and new technical innovations all require a continual examination of brand new processes and a high degree of mental flexibility