lucas papademos : eurosystem and bank of russia cooperation programme introductory statement by mr lucas papademos, vice president of the european central bank, on the occasion of launching the eurosystem and bank of russia cooperation programme on banking supervision and internal audit, moscow, 20 march 2008. * * * it is a pleasure for me to be here in moscow today, together with my esteemed colleague first deputy chairman melikyan of the central bank of the russian federation and his excellency ambassador marc franco, head of the delegation of the european commission to russia. i would first like to thank first deputy chairman melikyan for his kind opening remarks and all those who have contributed to the organisation of this ceremony. i would also like to greet the representatives of the eight national central banks of the eurosystem who accompany me here today, marking their strong institutional commitment to and support for this cooperation programme : the deutsche bundesbank, the bank of greece, the banco de espana, the banca d ’ italia, the banque de france, de nederlandsche bank, the oesterreichische nationalbank and the suomen pankki - finlands bank. today, we are taking a further step that advances the increasingly close cooperation between the bank of russia and the eurosystem, by signing a protocol which accompanies the contract for the eurosystem cooperation programme with the bank of russia that was signed by ambassador franco earlier today. over the past few months, the staff of our institutions have been in very close contact, preparing together the terms of the contract and finding appropriate solutions to a rather diverse set of challenges. i would like to ask you, mr chairman, to extend our warmest thanks to the staff of the bank of russia for their efforts to address all pertinent issues. the new three - year cooperation programme will start on 1 april and will focus on banking supervision and internal audit. in the area of banking supervision, the eurosystem will support the bank of russia in its gradual implementation of the internationally accepted principles of the basel committee on banking supervision that are commonly known as the basel ii framework. the financial market turmoil that emanated from the us subprime mortgage crisis has highlighted, among other things, the importance of transparency and of sophisticated and effective risk management standards and practices in banks. the basel ii framework provides an advanced approach to capital measurement and capital standards. it represents the regulatory response to the increasingly complex and globally integrated financial markets

in frankfurt. the expertise on the implementation of the basel ii framework and the risk - based internal audit practices will be provided by the national central banks and the ecb ’ s internal audit department. in the context of this programme, bank of russia experts will have the opportunity to visit their colleagues in eu countries. russia and the european union are important partners. one key aspect of the partnership is the overall objective of the european union and the russian federation to enhance the regulation, supervision and governance of financial markets in russia. this should contribute to improving the investment climate and supporting closer economic relations between the eu and russia. we very much appreciate the assistance of the european commission in giving substance to this aim, as this cooperation programme is supported by the delegation of the european commission to russia with a budget of €3 million. i can assure you, ambassador franco, that we look forward to continuing the successful cooperation with you and your staff that we had during the previous project. i would also like to thank you and your collaborators for having supported the preparations and for your help in handling a number of technical, administrative and legal issues. sound practices in the fields of banking supervision and internal audit are important not only for the effective performance of the tasks of a central bank, but also because they contribute to the efficient and stable functioning of the financial system that benefits the economy as a whole. we have noted with great interest the reform efforts of chairman ignatiev and his team in the bank of russia over the past years. with this programme, the eurosystem hopes to contribute to further strengthening the bank of russia ’ s banking supervision and internal audit functions. allow me to conclude by expressing my confidence that the implementation of this programme will be characterised by the close and constructive cooperation between the eurosystem and the bank of russia, as well as with the delegation of the european commission to moscow. za nashe sotrudnichestvo! thank you very much for your attention.