optimal arrangement for the organisation of supervision at the national level. all organisational models – sectoral supervision, supervision by objectives, supervision in a single authority – can in principle work well or fail depending on circumstances. however, regardless of the model, it is important that there exists a very close and smooth interplay between the central banking and the supervisory function. an analysis of the institutional supervisory setting in place in eu member states shows that the majority of eu central banks have extensive supervisory responsibilities and confirms a tendency towards strengthening the role of central banks in supervisory activities. for instance, in germany and austria the key role of the central bank in conducting on - going prudential supervision of banks and on - site bank inspections, whose results are reported to the separate supervisory authority, has been recently strengthened. as the experience of the financial market correction is very likely to challenge some views that previously seemed to be fairly consensual, we can wonder whether it brings new elements also as regards this issue. in general, the experience of the eurosystem central banks during the market turmoil shows the importance for the central banks of the availability of full supervisory information for the discharge of their tasks. more specifically, all central banks felt necessary to deepen the dialogue between the central banking and the supervisory function for a better understanding of the market turmoil. [ conversely, in some member states the domestic central banking function provided the supervisory function with the necessary information concerning money and financial markets, banks ’ liquidity positions and the collateral provided by banks in open market operations. ] therefore the experience of the eurosystem central banks during the financial market turmoil clearly confirmed the existence in practice of relevant information - related synergies between the supervisory and the central banking functions. moreover, the experience made has highlighted the particular importance of a smooth interplay between the central banking and the supervisory functions in certain areas. first, in the area of monitoring and assessing risks to financial stability, central banks can benefit from extended access to supervisory information and intelligence to better understand risks and vulnerabilities for the financial system as a whole. at the same time, the experience made in some countries showed that a possible area for improvement concerns the modalities with which the outcome of the financial stability assessment may trigger concrete supervisory action. the bottom line here is that the supervisory authority should be able to take into consideration the results of the macro - prudential analysis made by the central banks in its supervisory activity. second, in the area of liquidity, there

is clearly room for a closer interplay between the two authorities. central banks would benefit from enhanced access to supervisory information and intelligence for its role of contributing to the orderly and smooth functioning of money markets. to that end for instance access to information on banks ’ liquidity contingency planning funds would be useful. at the same time, supervisors would benefit from information available at central banks stemming from their role in the money markets. in europe, an important step in this direction is the recent proposal of the commission to review the capital requirements directive. this directive includes a provision setting an obligation for the consolidating banking supervisor to alert interested central banks and communicate to them all necessary information, whenever an emergency situation arises which has the potential to jeopardise financial stability in any of the member states where the banking group is present through subsidiaries or systemically relevant branches. third, in the area of crisis management and resolution, the developments of the last few weeks showed the importance of close interaction between the two authorities, in particular when the provision of emergency liquidity assistance become necessary. in this field, i believe that an important step forward is represented by the mou on financial stability arrangements signed by the eu central banks, supervisors and ministries of finance in june 2008, which i already mentioned before. conclusion eu and national authorities are developing a number of policy measures to respond to the financial market turmoil. these efforts show the strong commitment of all eu and national authorities to take proper action in a timely fashion with a view to responding to the challenges posed by the present financial turmoil. every effort is also made to ensure that actions are coordinated without raising undue concerns from the perspectives of preserving the level playing field and competition among financial institutions. let me conclude by making a reference to two other initiatives aiming to further strengthening the eu institutional framework. first, the eu council decided last week to establish a mechanism ( the financial crisis cell ) comprising the presidency - in - office, the presidents of the commission, the ecb ( in conjunction with other ncbs ), the eurogroup and the governments of member states to ensure that information is provided in confidence and with timeliness to all members states and institutions. second with a view to improving the coordination of supervision at european level, the european council welcomed the setting up of a high level group by the commission. both initiatives are welcomed by the ecb which participates in the former initiative and will provide its contribution to the latter.