is still underway and the financial stability board is expected to provide recommendations to the g20 summit of november in seoul, the european council has recently agreed that eu member states should introduce systems of levies and taxes on financial institutions to ensure fair burden - sharing and to set incentives to contain systemic risk. as regards these initiatives, i would like to underline that the ecb has always been supportive of exploring the feasibility of such measures. however, for such measures to have the desired effect, it is important that an internationally coordinated solution is ensured. i am also of the view that any contribution by financial institutions should be complementary and coherent with supervisory and regulatory regimes. sequencing of the implementation of measures is thus of utmost importance. finally, it is important that the higher overall cost of funding is not passed on to the customers, for instance in the form of higher lending rates / fees or lower remuneration on deposits. another important area of regulatory reform is the efforts underway to achieve a single set of high - quality global and independent accounting standards by june 2011. in order to have a sound regulatory framework having high - quality and convergent accounting standards is crucial. we have to ensure that the current gap between the ifrs and us gaap narrow rather than widen. it seems that the current fasb proposals on classification and measurement of financial instruments would result in more financial instruments to be measured at fair value, leading to an overall expansion of fair value accounting. accepting this would not address some of the key lessons from the financial crisis, namely that fair value accounting does not always provide decision - useful information and it may exacerbate pro - cyclical effects. in addition, an expansion of fair value accounting would be in direct contradiction to the “ mixed measurement model ” as endorsed by the iasb, and therefore represent a major setback on achieving accounting convergence. supervisory reform let me turn to briefly touch on the progress with the supervisory reform. if there is one uncontested lesson from the crisis it is the need to further develop the capacity of the authorities to conduct macroprudential supervision. the ultimate aim of macro - prudential policies is to contain the build up of financial vulnerabilities and ensure that the financial system is able to withstand their unwinding, minimising potential spill - overs to the real economy. an effective macro - prudential framework aims at delivering a thorough analysis of systemic risks, as well as the formulation of appropriate policies to address such risks identifying, in

has shown the importance of containing the excessive build - up of leverage in good times and enhancing the overall quality of capital with a view to strengthening the resilience of the financial sector. the package prepared by the basel committee covering capital and liquidity reform proposals is very comprehensive and addresses these issues by improving the quality, consistency and transparency of capital for credit institutions, as well as developing a framework for liquidity risk. [ the main elements of the proposals are : first, to improve the quality of capital, especially tier - 1 capital to improve loss - absorption on a going concern basis. second, the introduction of a non - risk - based leverage ratio as a supplementary measure to the basel ii risk control framework aims at curbing the excessive balance sheet growth we have witnessed. third, the introduction of a range of measures, intended to mitigate the inherent pro - cyclicality of the financial system. and lastly, the introduction of capital buffers and forward - looking provisioning should ensure that the financial system absorbs the shocks and thus evening the volatility of the financial and real economic cycles. ] as you know, quantitative impact assessments have been conducted in order to assess the cumulative impact of the reform on financial institutions and on the real economy. as the preliminary results will be discussed at the july meeting of the basel committee, it would be premature to take a position on matters such as the desirable calibration. but let me just make two points. firstly, from a conceptual point of view the ecb supports the proposed measures, particularly in light of the lessons learned from the crisis. secondly, the ecb is of the view that notwithstanding the outcome of the impact assessments, we should not weaken the standards. it would be preferable that where relevant a longer transition period is agreed upon, balancing the need for enhancing banking stability and maintaining the stable provision of credit to the economy. the crisis has also highlighted the particular importance of so - called systemically important financial institutions ( sifis ). therefore another important part of the regulatory reform is the need to reduce the moral hazard associated with systemically important financial institutions. it will be key to find ways how sifis can internalise the potential costs they pose to the financial system. this could be achieved by the introduction of additional prudential measures, for instance through capital surcharges or contingent capital instruments, liquidity surcharges, more intrusive supervision, and / or the introduction of bank levies. although work