term and long - term needs of different sme segments. of special mention in these schemes are the schemes for modernization of smes, for developing alternate energy resources and establishing silos and storage houses. the maximum use of these schemes by smes can benefit the sector in a big way with resultant positive impact on the economy. sbp has also launched a credit guarantee scheme for small and rural enterprises that shares credit losses of banks, to the extent of 40 percent on loans to the small enterprises, under a ukaid - supported financial inclusion program. this scheme has been highly successful and the latest figures show that 64 % of the guarantee limits allocated to banks have been utilized by them. discussions are underway to further enhance the size of this facility so that a larger number of small enterprises are accommodated under the scheme. additionally, sbp, in collaboration with ifc, is assisting banks in their capacity building efforts, focusing on the areas of strategy formulation, product development, risk management, hr development and marketing area. initially, bank al falah has been selected for its capacity building, while many other mid - tier banks have been lined up for the subject consultancy project. this project will revitalize the sme lending by the participating financial institutions and will be a prototype for other financial institutions who could see financing to smes as profitable business ventures. keeping in view the absence of credible research data on sme clusters, sbp has been undertaking cluster development surveys, in partnership with ifc and lums, that will greatly help stakeholders, and especially banks, in coming up with cluster - specific products and tailored sme banking strategies. so far, 11 clusters have been covered whose survey profiles are available on the sbp web, while surveys of 10 more sme clusters are underway, that will soon be completed for the use of relevant stakeholders. lastly, i would emphasize the role of banks that is crucial for the development of smes, given their critical positioning and greater capacity in terms of their outreach and availability of funds. the actual statistics for lending to smes are not satisfactory in recent years. bank credit to smes has declined over the last 4 years from rs 437 billion in 2007 to rs 248 billion on june, 2012. with this decline, the smes ’ loan proportion to the total advances of banks has also decreased from 16 percent in 2007 to less than 8 % percent in 2012. bis central bankers ’ speeches although, this decline can partly be attributed to adverse economic conditions during the period and

vitor constancio : financial stability – methodological advances and policy issues welcome remarks by mr vitor constancio, vice - president of the european central bank, at the european central bank conference on “ financial stability – methodological advances and policy issues ”, 14 – 15 june 2012, frankfurt am main, 14 june 2012. * * * general welcome ladies and gentlemen on behalf of the ecb, i am very pleased to welcome you to this high level conference on “ financial stability : methodological advances and policy issues ”. in particular, it is my pleasure to welcome our distinguished speakers, discussants and panellists. since the eruption of the financial crisis in mid - 2007, and especially in its second, and more euro - centred phase, financial stability issues have come to the forefront of both the academic and policy - making agendas. as a reflection of this development, with this conference we have invited a number of prominent speakers to cover a wide range of analytical areas, which we think are crucial for addressing the complex and pertinent policy issues that we are facing during these difficult times. it is our hope and expectation that following the various presentations and discussions we will have over the next two days, our knowledge and awareness of key financial stability analytical tools and policy issues will help us overcome the challenges that we are facing in our efforts to move to a more resilient and sustainable financial system. conference is organised around three elements of financial stability analysis ( surveillance, assessment and policy ) the conference is organised around three broad elements that characterises how financial stability analysis is conducted here at the ecb. first, through our financial stability surveillance activities we monitor, identify and prioritise potential sources of systemic risk in the euro area and the eu financial system. this is largely done through the use of a number of quantitative tools, such as indicators to measure systemic risk and the level of stress in the financial system, as well as with early warning indicators and models to detect and predict underlying vulnerabilities. second, on the basis of the systemic risks identified in the context of our surveillance work we subsequently aim at assessing the potential impact of a materialisation of these risks on the stability of the euro area / eu financial system and its degree of resilience. this strand of our work likewise is based on various quantitative tools that include a top - down macro stress - testing framework and different types of contagion models using network analysis. third, the final element of our organisational setup consists