). see ben s. bernanke ( 2011 ), “ clearinghouses, financial stability, and financial reform, ” speech delivered at the “ 2011 financial markets conference : navigating the new financial landscape, ” sponsored by the federal reserve bank of atlanta, held in stone mountain, ga., april 4 – 6. bis central bankers ’ speeches infrastructure. regulators, clearing members, and their clients also must be engaged in making sure ccps are safe and effective at managing the risks, interactions, and interdependencies inherent in the clearing process. i will now turn to some key aspects of the regulatory framework for ccps that will strengthen the financial system and help reduce systemic risk. three keys to ensuring central counterparties are effective in mitigating systemic risks there are three key dimensions to making the reform program work in practice : enhancing supervision and regulation of ccps, strengthening ccp risk management and governance, and promoting the stability of clearing members. enhancing central counterparty supervision and regulation the decision to require central clearing of standardized derivatives as a foundation for reform has raised the stakes for ccps, clearing members, regulators, and the general public. at the international level, financial regulatory authorities addressed this challenge by updating, harmonizing, and strengthening the minimum risk management standards applied to financial market infrastructures, including ccps. the new principles for financial market infrastructures, commonly referred to as the pfmis, set a higher bar for risk management to strengthen these core market infrastructures and promote financial stability. 6 just last week, the cftc finalized its adoption of the pfmis for the derivatives clearing organizations it regulates and supervises. 7 the pfmis require that a ccp develop strategies to cover its losses and continue operating in a time of widespread financial stress. in particular, the pfmis require that a ccp maintain financial resources sufficient to cover its current and potential future exposures to each participant fully with a high degree of confidence. ccps must maintain additional resources to cover the failure of the clearing member with the largest exposure under extreme but plausible market conditions. in the case of ccps with more complex risk profiles or those that are systemically important in multiple jurisdictions, the ccp must have adequate resources to handle the failure of the two clearing members with the largest exposures. finally, the pfmis require a ccp to identify scenarios that may potentially prevent it from being able to continue operations, including so - called end - of - default waterfall issues

, i would stress that the two - pillar structure of the ecb ’ s strategy has been adopted for a good reason. both pillars have well - defined, important and complementary roles. the first pillar consists of approaches to the price determination process which assign a prominent role to money. the second pillar comprises analytical frameworks which focus mainly on real economic variables. both approaches are valid and can be useful to analyse different aspects of the economic environment in a manner which assists monetary policy decisions. this broader approach, prompted by the adoption of the two - pillar structure, is particularly proficient in coping with the uncertainties inherent in modern and complex economies. we should recall that these uncertainties may have been compounded by the regime shift associated with the transition to stage three of economic and monetary union. the changeover to the single currency may have altered the way expectations are formed in the euro area. it may thus have changed the effects of monetary policy on financial behaviour, consumption, investment and wage bargaining. or, to summarise, it may have changed the very nature of the monetary transmission mechanism in the euro area. in such an uncertain environment, monetary policy analysts must use a “ full - information approach ” and carefully cross - check the signals sent from different types of indicators. moving to more general issues associated with the introduction of the euro, there is no doubt that this regime shift is acting as a powerful catalyst for economic growth and restructuring in europe. several forces are at work. the introduction of the euro combined with the single market has increased the “ economic ” size of the market. price transparency has significantly improved both across countries and over time. the macroeconomic horizon of investors has been, so to speak, “ cleared ” by the principle of price stability and the rules of fiscal discipline. moreover, the single currency provides an impetus for the development and the integration of financial markets in europe. this in turn will contribute to a more efficient allocation of savings across europe. the development and the integration of capital markets in europe have been fostered for some time now by financial liberalisation, globalisation and technological innovation. the introduction of the euro is giving this trend a significant boost in europe. the single currency has removed the exchange rate risk barriers between the countries of the euro area ; it is facilitating the standardisation of debt instruments and widening the range of investment opportunities. corporate bond issuance has increased significantly since the introduction of the euro. there are indications that the focus of issuers is shifting in some respects from