a passport or other proof of identity. 10. we also need to be mindful of the large differences between microfinance activities and microfinance institutions from one country to another. for instance in brazil, a popular form of microfinance is the use of correspondent banking, or in other terms “ branchless banking ”. due to the sheer size of this country, commercial banks are only located in the main cities and did not or could not offer financial services to people in distinct villages until 1999. with the lifting of several regulations in that year, commercial banks were allowed to set up relationships with non - financial and non - bank firms to provide a wider range of services. many banks contracted local chains, for instance grocery stores, pharmacies, etc., which were allowed to handle simple banking operations on behalf of the financial institution. however, the financial institution itself is the ultimate provider of financial services and remains responsible in the end. in india, in the 1999s, microfinance evolved quite successfully through so - called self help groups. in these groups, 10 to 20 persons pool savings, collectively obtain loans and lend to each other. and in bolivia, the most successful microfinance institution was incorporated as a commercial bank in 1992. 11. but despite these differences, microfinance supervision should not and cannot be a complete divergent regime. a different supervisory framework for microfinance activities carries the risk of unbalancing the international level playing field. moreover, many banking standards already offer flexibility to allow for the level of complexity and size of institutions, the level of risks or the existence of international activities. and all the same, supervision of microfinance institutions need not be harmful per se. adequate supervision may also enhance the perceived legitimacy of microfinance institutions and improve their operational management, due to for instance the higher standards for reporting and financial control. this may broaden their access to funding, allowing them to expand their financial activities and serving more clients. furthermore, there may exist a positive relationship between the development of supervisory guidance for microfinance activities and for supervision in general. so taking all this together, we should search for a tailor - made solution within the scope of existing regulation. 12. one such solution can be found in the basel core principles. to support supervisors worldwide in building and improving a set of prudential regulations, the basel committee for banking supervision has developed this set of minimum standards for sound supervision. the core principles provide a benchmark for

is logical to first look to what extent macroprudential policies would be able to mitigate these systemic risks. the figure below provides for a mapping of our current macroprudential toolbox, based on eu / dutch legislation. the green boxes indicate the instruments that most central banks have at their disposal. the salmon colored boxes are measures that can be applied by macroprudential authorities, but whose effectiveness in mitigating systemic risks is generally perceived to be limited. the red boxes indicate instruments that could be applied, but are currently not within the remit of most central banks. finally, there are several white boxes which indicate that no specific macroprudential instrument is available. figure 1 : curent macroprudential toolbox based on eu / dutch legislation source : based on brochure dnb's financial stability task so what do we conclude from this overview? allow me to make three observations. first, the macroprudential framework does not provide a fully - covered system. contrary to monetary policy that ‘ gets into all the cracks ’, macroprudential policies are limited to specific parts of the financial system. available measures are also almost exclusively targeted towards banks, which implies a potential for risk - shifting beyond the banking sector. second, macroprudential measures are mostly targeted at strengthening resilience, but not at addressing the build - up of underlying vulnerabilities. current available instruments create buffers to better absorb losses when they occur, but they neither improve the functioning of the real economy, nor do they stem the origination of losses. for example, an important systemic risk like corporate indebtedness cannot be directly addressed by macroprudential authorities. thirdly, potentially very effective measures often do not fall within the remit of macroprudential authorities. such measures are often considered too important from an electoral perspective to delegate their activation to independent authorities. these include sovereign risk weights, borrowerbased limits and preferential tax incentives. they are often part of broader economic trade - offs, thereby however creating a reality that macroprudential authorities cannot employ full ammunition to address systemic risks. iii. policy implications so my main message today is that of macroprudential modesty. although important frameworks have been developed in the aftermath of the global financial crisis, we cannot regard them to be at par with monetary or fiscal policies. the impact of macroprudential measures are unlikely to be as forceful as monetary policy, as