in particular, it is time to build up countercyclical strength. let me put this into perspective. in 2008, banks faced large amounts of stress and increasing losses. this led to a governmentfunded capital injection in 2009 because we feared that we could be facing a credit crunch. if we have a sizeable buffer in place before the next financial storm hits, it can be released. and thereby serve the same function as the capital injections did during the financial crisis. so how big should the countercyclical capital buffer be? the capital injection in 2009 was about 6. 2 billion euro. a buffer of 2. 5 per cent equals approximately 4. 7 billion euro. in my view, in order to have a countercyclical capital buffer that can make a difference, 2. 5 per cent appears reasonable. when it comes to the countercyclical capital buffer, we can make two possible mistakes. we can build up a sizeable buffer and it is not needed for a long time. or, we do not build up the buffer in time and then we need it. i would rather make mistake number one. page 3 of 5 it is the job of the danish systemic risk council to recommend increases and release of the buffer. however, the responsibility of taking timely action lies with the policy - makers. * * * before i tell you about the rest of the day, i would like to say a few words about responsibility and timely action. when conducting macroprudential policy we need to ensure democratic accountability while avoiding inaction bias. democratic accountability is important because measures such as restricting how much individuals can borrow have direct distributional effects. in denmark, the responsibility is with the minister for industry, business and financial affairs. while it is the task of the danish systemic risk council to reduce the risk of political inaction bias. the council can make recommendations and the minister then has to comply or explain. this ensures democratic accountability but it does not completely eliminate the inaction bias. the set - up with comply or explain can lead to a self - imposed inaction bias by the council. if a recommendation by the council is not followed, the council's credibility is challenged. if this is repeated, the council risks becoming irrelevant. therefore, the model's long - term success depends on policy - makers'continued implementation of the council's recommendations. * * * before i leave the stage to our first speaker, let me just say a few words about the

jose manuel gonzalez - paramo : re - starting securitisation keynote speech by mr jose manuel gonzalez - paramo, member of the executive board of the european central bank, at the association for financial markets in europe / european science foundation ( esf ) and information management network global abs ( assetbacked securities ) 2010 conference, london, 16 june 2010. * * * ladies and gentlemen, i. introduction i am very pleased to be here in london to participate again at the afme / esf and imn global abs conference. today, i would like to share with you some thoughts on the restarting of the abs markets, in the light of the important role that it should play from a macro - financial point of view. more precisely, i shall first outline the role which securitisation should play in the financial system and why this role is important. then, i shall assess in more detail the current situation of the securitisation markets. finally, i would like to make some considerations on the way forward for the restarting of the abs markets. in doing so, i shall assess what has been done and what still needs to be done to reach a sustained rebound of the securitisation markets. ii. current financial market conditions to set the stage, i shall refer to the ecb ’ s latest financial stability review, published on 4 june, which analyses in detail the so - called large and complex banking groups ( lcbgs ), and the findings of which may, with some caution, be extended to the euro area banking sector as a whole. thus, we noted in our latest financial stability review that many lcbgs from the euro area have returned to a modest profitability in the course of 2009, and that their financial performance has strengthened further in the first quarter of 2010. at the same time, deleveraging has continued, while banks have further reduced their reliance on wholesale funding in favour of an increased share of more stable funding sources, such as retail customer deposits and equity. notwithstanding this slightly positive note, over the next few years the euro area banking sector will face large funding needs, as most of you are aware of. in particular, the 20 largest euro area banking groups have about eur 800 billion of long - term debt outstanding that will need to be refinanced between may 2010 and end - 2012. this figure represents almost half of their outstanding debt with a maturity of over one year. in addition, the need for