esrb. in this process, the industry needs to be closely involved in risk detection and overall surveillance work, as information and insights from market participants will be essential inputs. we also expect the industry to pay close attention to the macro - prudential views that are communicated by the esrb, among others, stemming from regular systemic risk assessments. although each institution may not, per se, be able to create disruptive market conditions – at least in normal times – as the financial crisis has shown, the collective positions of the financial industry can have severe implications for financial stability, possibly with repercussions in the broad economy. in this regard, we will send messages to the industry that we trust will be heeded. efforts are also underway to ensure close cooperation between central banks, supervisory authorities and the esas so that risk assessments combine micro and macro - prudential perspectives and are of high quality and rigour. this should act as an important crisis prevention tool, also enabling the esrb and the esas to respond in a timely fashion with policy measures aimed at addressing specific risks should this be deemed necessary. we are determined to make the new framework work in an efficient way to ensure financial stability in the european union.

an eu - wide level, the risk surveillance that we plan to undertake – in the same fashion as done, for instance, at the ecb in the context of the preparation of our financial stability review – needs to have a wide reach, monitoring markets, financial institutions and the economy at large, so as to ensure that no risk is overlooked. several analytical tools and models are being developed for this type of analysis, including early warning models and financial stability indicators that use the information content of available financial and macroeconomic data to identify, early on, where imbalances may be building up. important variables to monitor in this context are, for example, measures of bank leverage, balance - sheet growth, maturity mismatches, property price changes, private sector leverage and current account deficits. contemporaneous financial stability indicators, capturing the state of system stability and forward - looking indicators revealing the market perception of the probability of an adverse systemic event in the period ahead ( e. g. calculated on the basis of credit - default swap spreads ) are also important risk surveillance tools. the risk identification process would support the design of risk scenarios and the discussion of possible triggers that could lead to their crystallisation, supported by current and projected macroeconomic and financial variables. once a set of risks has been identified as potentially systemic, the second leg in the analysis is the assessment of the severity of those risks, as well as an evaluation of the ability of the financial system to absorb their impact. this step will form the basis for risk prioritisation and inform the esrb in its decision on a possible need to issue a risk warning. it is therefore most closely associated with the policy action, and for this reason, a well - developed analytical framework is needed that allows us to quantify both the likelihood and the severity of a specific risk in order to support the esrb ’ s decisions. clearly, there is widespread awareness that the analytical framework, no matter its level of sophistication, cannot replace the expert knowledge and judgment of the esrb ’ s members. however, a consistent analytical framework and rigour in the analysis would provide valuable input to the board ’ s discussions and back deliberations on risk warnings and policy recommendations. analytical tools to assess the severity of identified risks and overall resilience of the financial system clearly include macro stress - testing models. an eu - wide stress - testing exercise, prepared and conducted by the cebs and national supervisory authorities, in close cooperation with the