are already signs that the european banking sector is benefiting from single supervision – even before we have begun the actual task of supervision. * * * as we are limiting the assessment to the euro area ’ s major banks, meaning that few of you here today are directly affected, i ’ ll spare you the technical details of the comprehensive assessment for now. the key factor is that it is creating transparency, is credible and is restoring trust in european banks. this also brings benefits to banks and networks with a local presence. we are therefore working closely with experienced national supervisors. they have the expertise we need. we are also supported by external advisers from the private sector. the bis central bankers ’ speeches credibility of the exercise can be significantly enhanced by involving a neutral “ third party ” that will operate in all the countries involved. what this means in concrete terms is that more than 6, 000 supervisors and advisers are currently conducting on - site reviews. the balance sheet assessment involves looking in detail at no fewer than 760 portfolios. this means we are checking some 135, 000 credit files. so the assessment is comprehensive in both name and content. of course, this does not come for free. the process itself is designed to be highly transparent and consistent. at the national level, staff of the ecb and of the supervisory authorities of other member states are evaluating implementation of the comprehensive assessment. although the national supervisory authorities are providing us with assistance, the final review is always performed centrally by the ecb, to ensure that all the results are comparable. it is important that the central bank has ultimate discretion and power, so that national discretionary margins can be reconciled. a similar rationale applies to the interaction between the assessed banks and the supervisor. with the stress test, for example, we have provided a dual quality control. we check whether the data in the bottom - up stress test are consistent, and whether the models and assumptions are coherent. but we also run our own top - down stress test. and what happens after the stress test? at the very end of the exercise we will publish the final results. but it is not our intention to spring a total surprise on the markets, or on the banks concerned. misunderstandings and unnecessary speculation would certainly run counter to the aim of creating a more solid banking sector and restoring investor confidence. which is why we intend to consult the banks affected in advance on the format of publication. i also think it makes sense to publish the format template we are using before we release

, but it may not be deep enough to prevent large price swings when demand for liquidity is significantly above the norm. this consideration would be most relevant in the markets that are amenable to high - frequency trading, and automated trading more generally, where assets are fairly standardized, such as equities and u. s. treasury securities, and less relevant in markets where securities are more idiosyncratic, such as corporate bonds. it is also possible that markets that more readily lend themselves to high - speed trading may be characterized by relatively greater concentration over time. achieving the speed necessary for high - frequency trading requires large technology investments that necessarily may support a relatively more limited number of market participants. greater concentration in turn might be associated with lower resilience at times of stress. the possible effect of hfts on the resilience of market liquidity is an important topic for future research. of course, other developments may be affecting liquidity in financial markets. for example, market participants have indicated that changes in participants ’ risk - management practices may be contributing to reduced market liquidity. in particular, the experience of the financial bis central bankers ’ speeches crisis may have led many participants to reevaluate the risk of their market - making activities and either reduce their exposure to that risk, become more selective, or charge more for it, thereby reducing liquidity. 4 it is also worth noting the increased role of asset managers on the buy side of the fixed income markets. during normal market conditions, the demand for liquidity from this group of bond holders is likely relatively small, since asset managers acting on behalf of retail investors generally buy bonds to hold them for some period. moreover, managers of openend funds hold liquidity buffers that enable them to respond smoothly to normal redemption demands. however, because the large increase in bond fund holdings is relatively recent, little is known about how these funds will react to periods of market stress or to abrupt changes in financial conditions and the adequacy of their liquidity buffers for such situations. because funds potentially allow daily redemptions even against illiquid assets, it is possible that redemptions could be magnified in stressed conditions as individuals try to redeem early, which in turn could lead to liquidations of relatively less liquid assets, thereby amplifying price volatility and reducing market liquidity. if in fact liquidity resilience has declined recently, it may be a transitional development that will be corrected going forward as