a subsidiary of the bank and the creation of a separate financial policy committee within the bank that will identify, monitor, and take action to reduce systemic risks. in the euro area, the newly created european systemic risk board, which is chaired by the president of the ecb and includes the governors of all european union central banks, draws heavily on central bank expertise, including analytical, statistical, and administrative support from the ecb. in the united states, the federal reserve has reoriented its existing supervisory activities to incorporate a broader systemic focus ; it also has been assigned new responsibilities for financial stability, including supervisory authority over nonbank financial institutions that are designated as systemically important by the financial stability oversight council and new backup authorities for systemically critical financial market utilities. the integration of monetary policy and financial stability policies as i noted earlier, in the decades prior to the crisis, monetary policy had come to be viewed as the principal function of central banks ; their role in preserving financial stability was not ignored, but it was downplayed to some extent. the financial crisis has changed all that. policies to enhance financial stability and monetary policy are now seen as co - equal responsibilities of central banks. how should these two critical functions fit together? at an institutional level, as i have already suggested, the two functions are highly complementary. monetary policy, financial supervision, and lender - of - last - resort policies all benefit from the sharing of information and expertise. at the federal reserve, for example, macroeconomists help design stress - test scenarios used by bank supervisors, while supervisors provide information about credit conditions to macroeconomic forecasters. bis central bankers ’ speeches threats to financial stability, and their potential implications for the economy, are thoroughly discussed at meetings of the fomc. an important debate for the future concerns the extent to which it is useful for central banks to try to make a clear distinction between their monetary and financial stability responsibilities, including designating a separate set of policy tools for each objective. for example, throughout the crisis the ecb has maintained its “ separation principle ” under which it orients changes in its policy interest rate toward achieving price stability and focuses its unconventional liquidity and balance sheet measures toward addressing dysfunctional markets. the idea that policy is more effective when separate tools are dedicated to separate objectives is consistent with the principle known to economists as the tinbergen rule. 7 in practice, the distinction between macroeconomic and financial stability objectives will always be blurred to some extent, given

jaime caruana : reflections on financial information from the standpoint of a banking supervisor speech by mr jaime caruana, governor of the bank of spain, at the 13th xbrl international conference, madrid, 16 may 2006. * * * introduction good afternoon. i would like to begin by thanking the organisers of this 13th xbrl international conference for their kind invitation to participate. i am delighted to have this opportunity to close today ’ s session by sharing with you some reflections on financial information from the standpoint of a banking supervisor. and it is, of course, a special pleasure for me to be able to address this audience in my home country. i guess that, looking from the outside, it might seem somewhat strange that banking supervisors and other regulators are taking such an active interest in a computer language. but i think that all of us here are very well aware of the role that tools such as xbrl can play in promoting the effective and efficient flow of financial information, and it is on this wider objective that i want to focus my intervention today. i will begin with a brief introduction to recall the important role that information plays in financial markets from a macroeconomic perspective. but i would like to devote the main part of my presentation to five initiatives that i believe regulators - as one of the sources of information demands on the industry - can take to contribute to ensuring that financial information can be generated, transmitted and used in the most efficient and effective way, to the benefit of stakeholders and interested parties, in today ’ s complex financial markets. in doing so, i will draw on my experience as the governor of an eu central bank with prudential supervisory responsibilities, and also as the current chairman of the basel committee on banking supervision. the importance of financial information so, why is information so important? quite simply, because information is the fabric from which financial markets are made. let me elaborate on this statement. in economic terms, an efficient market is defined as one in which prices reflect all available information. extrapolating this, we can say that the efficient functioning of financial markets requires that the prices within those markets reflect all the information on the financial asset being traded. for markets to be efficient, therefore, it is necessary that sufficient information flows with sufficient speed. however, information is neither created nor transmitted spontaneously. first, it must be generated. then, it must be transmitted to users, through the appropriate channels and in the appropriate format and presentation. these users, in