, are wellequipped to handle these problems. central bank interventions have been effective in avoiding market disruptions, although on longer money - market maturities a substantial premium over official rates has emerged. the turmoil has also shown that in times of stress central banks must be prepared to enhance communication with the markets and to adapt their operational framework to market conditions, taking innovative steps when needed. the recent events have also raised a number of new questions concerning the design of these operations and their communication to the market. first of all, central banks must consider carefully how far they should go in devising new instruments to provide liquidity. in particular, at what conditions should non - deposit - taking institutions be eligible for refinancing operations? another problem is whether, and to what extent, the tools that are appropriate in emergencies should be announced in advance to the market or even used in normal situations. in order to address this issue, we need to analyse the trade - off between greater disclosure – which would acquaint the central bank ’ s counterparties with the non - standard procedures, thus facilitating their use in case of need – and the danger of exacerbating moral hazard, encouraging further risk taking. one more issue on which we need to reflect concerns the measures that serve to make recourse to these instruments less likely. for example, recent experience has made it evident that the characteristics of deposit insurance schemes are key to containing the risk of bank runs and liquidity crises. the role of communication and the benefits of full transparency are also crucial in case of crisis. as the events of the past year have shown, the prompt public announcement by the central bank of interventions to support individual institutions may trigger herd behaviour and exacerbate liquidity problems. it is our communication that will induce either stigma or trust. the need to reach a common understanding of these problems is particularly pressing at the moment. the central banks must intensify their cooperation in order to prevent liquidity crises and ensure a level playing field. enhanced communication and collective monitoring of market developments, with coordinated steps to provide longer - term funds, is of the essence.

total assets over total capital ). 6. introduction of new regulations about liquidity ratios as proposed by the basel committee. 7. prevention of the development of a “ shadow banking ” sector by enlarging the perimeter of regulated institutions, like hedge funds, and reinforcing consolidation accounting rules. 8. tightening securitization regulations to avoid its misuse, its complexity, and opaqueness that prevented it from performing as predicted to diversify and dilute risk. what happened with subprime mortgage bonds, cdos and credit default swaps was appalling and should not happen again. 9. reduction of the reliance for official regulatory purposes on rating agencies that have contributed to the pro - cyclicality of the financial sector and played a very negative role in the subprime crisis. the mere registration and monitoring of their activity and the elimination of conflicts of interest may not be sufficient to correct their performance. 10. introduction of new principles regarding risk management and remuneration guidelines to correct prevailing perverse incentives with an excessive short - term perspective. with the exception of points 4 and 9, most of these aspects of a new regulatory environment are being developed by european union institutions or the basel committee, subsequently to general guidelines prepared by the financial stability board and approved by the g20. it would seem then that the work has been progressing in the right direction to create a more resilient and efficient financial system. nevertheless, i want to make a few comments on aspects that i consider more important or are being insufficiently addressed. the first point refers to the assessment of whether the new rules are sufficient to prevent the excesses of finance and, in particular, whether the macro - prudential function is being implemented in a really efficient way for the same purpose. my answer tends to be positive because instruments like the gross leverage ratio, the capital buffers, the liquidity ratios and the discretionary use of pillar ii may be enough for the task. the remaining necessary instruments are related with the “ too big to fail ” problem that i address bellow. regarding macro - prudential policy, it looks as if in all countries the institution in charge will be limited to making warnings and recommendations. in europe, the proposed composition of the european systemic risk board ( esrb ) with the inclusion of the commission and the 3 esa representatives should ensure that this may not become a problem, guaranteeing at the same time the necessary coordination between the micro and macro levels. the whole setup may work well