to have started to overvalue property in order to lower ltv figures on loan applications. 14 completing the legal toolkit the current legal framework harmonises capital - based macroprudential measures. it establishes definitions and parameters, as well as rules and procedures for the allocation of responsibilities between national and european authorities. such measures are subject to a system of eu - level surveillance and, in some cases, authorisations. that system was set up at the very beginning of the european macroprudential experience. national authorities initiate the procedure for national measures. within the euro area, the ecb reviews them and may ‘ top them up ’ ( i. e. make them more restrictive ), while it has no power to ‘ level them down ’. 15 the ecb has defined and published the procedure that it follows when reviewing the national measures. 16 a differentiated impact was observed in israel ( tzur - ilan, 2017 ) for the segment of the population investing in housing ( but not for primary residence ), with a sharp reduction in the value of houses bought after different ltv limits were imposed on different categories of buyers ( first - time buyers, non - first - time buyers and investors who own two or more homes ). similarly, in ireland ( kinghan et al., 2016a and 2016b ), the introduction of differentiated ltv caps had heterogeneous effects based on borrower income. see for instance cerutti et al., 2017 ; ahuja and nabar, 2011. tzur - ilan, 2017. bentzen et al., 2018. acharya et al., 2018. montalvo and raya, 2018. article 5 ( 2 ) ssm regulation ( council regulation ( eu ) no 1024 / 2013 of 15 october 2013 conferring specific tasks on the european central bank concerning policies relating to the prudential supervision of credit institutions, oj l 287, 29. 10. 2013, p. 63 ). regulation of the european central bank of 16 april 2014 establishing the framework for cooperation within the single supervisory mechanism between the european central bank and national competent authorities and with national designated authorities ( ssm framework regulation ) ( ecb / 2014 / 17 ), articles 101 - 105 ( oj, l 141, 14 may 2014, p. 1 ). in contrast, bbms are not harmonised in the relevant legislation. they are thus left to national discretion, in terms of both

example : capital adequacy rules usually establish a zero risk weight on local sovereign claims denominated and funded in domestic currency. nevertheless, the new capital accord establishes risk weights on sovereign claims based on ratings provided by external credit assessment institutions or by internal rating methodologies. although the accord gives national supervisors discretion to apply lower risk weights to their domestic banks, it is very likely that subsidiaries of foreign banks will apply the capital weights established by their parent banks and by their home countries. should this happen, it will increase the financing costs of host countries ’ sovereign debt denominated and funded in domestic currency. iv ) the resolution of a troubled global bank the conflicts of interest that may arise when an international bank runs into trouble have been widely analyzed in recent years and will be an important topic at this meeting. we do not have yet any common understanding on how to deal with or resolve the failure of an international bank. neither do we have a common jurisdiction or a supranational legal court to resolve legal disputes. important efforts have been made to identify the information that needs to be shared among supervisors if such a crisis arises. however, the failure of an international bank could easily lead to conflicts among the various parties involved, as their interests will diverge considerably. these conflicts could make the attainment of reasonable and fair solutions extremely difficult. these conflicts could be particularly significant if the relative sizes of the international bank and its subsidiaries are substantially different. • the authorities of the country where the international bank is licensed will not be very keen on supporting subsidiaries overseas, even if they are relatively important for the local country. • on the other hand, local authorities could find it politically impossible to use public resources to support a foreign - owned bank. • if the troubled bank experiences liquidity problems, who should be responsible for providing liquidity? the central bank of the jurisdiction where the troubled subsidiary is incorporated, or the one of the country of the parent bank? • will the central bank of the subsidiary provide liquidity when it is evident that the subsidiary ’ s business was run by the parent? it is of the essence to encourage cooperation frameworks among supervisors, central banks, and finance ministries from countries involved in extensive cross - border banking. such frameworks should not be limited to the exchange of financial information. they must include agreements over procedures and the establishment of standards for the division of responsibilities. in order to improve the effectiveness of crisis management plans, european union and scandinavian countries have been conducting crisis simulation exercises