Risk Management Presentation July 30 2012

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International Association of Risk and Compliance Professionals (IARCP)

1200 G Street N W Suite 800 Washington, DC 20005-6705 USA Tel: 202-449-9750 www.risk-compliance-association.com
Top 10 risk and compliance management related news stories and world events that (for better or for worse) shaped the week's agenda, and what is next
George Lekatis President of the IARCP
Dear Member, Today we will start from the Financial Conglomerates Directive of the European Union. The establishment and development of large, complex groups combining licenses in various sub-sectors of the financial market, and in particular combining insurance business with banking business, was recognized in the early nineties. The Joint Forum - the G10 body of supervisors which monitors and discusses financial market trends affecting banking, insurance and securities markets - observed a need for additional supervision of this kind of groups and published their principles for the supervision of financial conglomerates in 1999. These principles explain that such supplementary supervision should enable supervisors to monitor, ring-fence, limit or otherwise influence activities which may spread risks from one entity of a financial conglomerate to another. The objective of this supplementary supervision was the control of potential risks of double gearing (i.e., multiple use of capital) and "group
I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com
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risks", i.e., the risks of contagion, management complexity, concentration, and conflicts of interest, which arise incrementally when licenses for different financial services are combined under the same roof.
The typical supervisory tools for this kind of supervision would be not only monitoring tools such as reporting of intra-group transactions, but also requirements for internal governance and group-wide risk management, and, of course, supervisory cooperation requirements. Last but not least supervisors would need exclusive powers to access information when approaching entities in a conglomerate. The Financial Conglomerates Directive (FICOD), a short directive of about 20 articles, was adopted in 2002 as a response to the need for supplementary supervision of complex groups laid out in those Joint Forum principles. The objective of supplementary supervision has been supported ever since by stakeholders when consulting on this initiative. FICOD supplements the two relevant sectoral directives: the Capital Requirements Directive (CRD) and the insurance directives. CRD provides for the prudential supervision of deposit taking banks and electronic money institutions. The activities of such firms build on the leveraging of available capital, and the directive aims at the protection of depositors through ensuring prudential soundness. The capital requirements relate to bank-specific risks, which are applicable to all regulated banking entities, stand alone and in a group. The insurance directives, aimed at the protection of policyholders, provide for the prudential supervision of firms conducting insurance activities and whose activities build on the investment of paid up premiums in such a way that the cash flows from these investments ensure that insurance claims can be paid out.
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To this end, insurance companies calculate how much provisions (the so-called technical provisions) they should keep for these claims.
The capital requirements for insurance companies are related to insurance-specific risks, more specifically to the uncertainty implicit in the calculation of technical provisions. While banking and insurance directives are thus aimed at calculating sufficient (capital) buffers for the protection of depositors and policyholders, FICOD, on the other hand, is concerned with the supplementary supervision of group risks, which are not bank- or insurance specific, but are rather inherent in controlling a group of many regulated entities that operate in different kinds of financial markets. This implies that entities which have a mutual relationship that affects the risk profiles of each of them must be included in the supervisory scope. For example, if a group were to invest in an airport, the CRD would require the bank in that group to determine a relevant exposure to the airport, if any, and keep sufficient capital for it. FICOD, for its part, would require the conglomerate to assess the potential contagion risks arising from difficulties or extreme stress scenarios experienced by the airport, and have contingency plans, ringfencing alternatives or other governance measures available Welcome to the Top 10 list.
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Updated list of identified Financial Conglomerates EBA has jointly published with E IOPA and ESMA the list of identified Financial Conglomerates, as at 1st July 2012, as required under Article 4(3) of the Financial Conglomerates Directive.
Solvency I I News
A short amending Directive was adopted on 3 July. This means that the original implementation date of 1 November 2012 in the Solvency I I Directive has been changed, with the new timetable requiring transposition by Member States on 30 June 2013 and implementation by firms from 1 January 2014.
SAMA Governors Statement On the Occasion of the I ssuance of the Council of Ministers Resolution Approving the Finance Laws
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Mario Draghi: Interview with Le Monde Interview with Mr Mario Draghi, President of the European Central Bank, in Le Monde, conducted by Mr Erik I zraelewicz, Ms Claire Gatinois and Mr Philippe Ricard
Preliminary international banking statistics at end-March 2012 July 2012 Large movements in the latest data are highlighted in the Statistical release. Data are available via the BIS WebStats interactive query tool, in PDF format and CSV files on the BIS website (locational and consolidated banking statistics), and as a single PDF file in detailed annex tables. Final statistics, with an analysis of recent trends, will be released in conjunction with the forthcoming BIS Quarterly Review, to be published on 17 September 2012.
Report on the Role of Insurance Guarantee Schemes in the Winding Up Procedures of Insolvent I nsurance Undertakings in the EU/EEA
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Developments in Kenyas insurance industry sector Remarks by Prof Njuguna N dungu, Governor of the Central Bank of Kenya, at the launch of Continental Reinsurance brand and products, Nairobi office, Nairobi
The Prospectus Directive - Update The Prospectus Directive 2003/ 71/EC (PD) and the Commissions Regulation on Prospectuses (EC 809 /2004) became effective on 1 July 2005.
Press Conference by Tadahiro Matsushita, Minister for Financial Services
The True Sign of I ntelligence Remarks by CFTC Commissioner Scott D. OMalia, Stevens I nstitute of Technology- Hanlon Financial Systems Lab Albert Einstein said, The true sign of intelligence is not knowledge but imagination.
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NUMBER 1
Updated list of identified Financial Conglomerates

EBA has jointly published with E IOPA and ESMA the list of identified Financial Conglomerates, as at 1st July 2012, as required under Article 4(3) of the Financial Conglomerates Directive.
Joint Committee
The Joint Committee is a forum for cooperation that was established on 1st January 2011, with the goal of strengthening cooperation between the European Banking Authority (EBA), European Securities and Markets Authority (ESMA) and European I nsurance and Occupational Pensions Authority (EIOPA), collectively known as the three European Supervisory Authorities (ESAs). Through the Joint Committee, the three ESAs cooperate regularly and closely and ensure consistency in their practices. In particular, the Joint Committee works in the areas of supervision of financial conglomerates, accounting and auditing, micro-prudential analyses of cross-sectoral developments, risks and vulnerabilities for financial stability, retail investment products and measures combating money laundering. In addition to being a forum for cooperation, the Joint Committee also plays an important role in the exchange of information with the European Systemic Risk Board (ESRB) and in developing the relationship between the ESRB and the ESAs.
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NUMBER 2
Solvency I I N ews
A short amending Directive was adopted on 3 July. This means that the original implementation date of 1 November 2012 in the Solvency I I Directive has been changed, with the new timetable requiring transposition by Member States on 30 June 2013 and implementation by firms from 1 January 2014.
Article 1
Directive 2009/ 138/ EC is hereby amended as follows: (1) Article 309(1) is amended as follows: ( a ) I n the first subparagraph, the date "31 October 2012" is replaced by that of "30 June 2013"; (b)After the first subparagraph, the following subparagraph is inserted: "The laws, regulations and administrative provisions referred to in the first subparagraph shall apply from 1 January 2014."; ( 2 ) I n the first paragraph of Article 310, the date "1 November 2012" is replaced by that of "1 January 2014"; ( 3 ) I n the second paragraph of Article 311, the date "1 November 2012" is replaced by that of "1 January 2014". The European Parliament is now in recess and the Omnibus I I Directive is scheduled for a plenary vote on 22 October. We will continue to monitor developments over the coming months and consider any implications for our domestic implementation plan. In the meantime, we will continue to work with firms towards the implementation date of 1 January 2014.
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On 18 July, we updated our internal model approval process (IM AP) pages with the question bank for life insurers, as part of our review of technical provisions.
On 1 1 July we published the second in a series of Consultation Papers to transpose the Solvency I I Directive into the UK Handbook. The full paper CP12/ 13 and further information is available on our consultations on Solvency I I page. http:/ / www.fsa.gov.uk/library/policy/cp/ 2012/12-13.shtml On 10 and 12 July E IOPA published the outcomes of its public consultations on reporting and the Own Risk and Solvency Assessment respectively. We will update our Pillar 2 and Pillar 3 pages from 23 July onwards with more information. Following our industry briefing on 27 February 2012, we gave further information about our approach to the review of technical provisions in our work with firms in our internal model approval process.
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NUMBER 3
SAMA Governors Statement

On the Occasion of the I ssuance of the Council of Ministers Resolution Approving the Finance Laws SAMA Governor Dr. Fahad Al-Mubarak expressed his thanks and appreciation to the Custodian of the Two H oly Mosques and H RH the Crown Prince for the issuance of these significant and essential laws in respect of the financing sector of the Saudi economy. Al-Mubarak also expressed his pride over the high trust with which SAMA is honored with the privilege to supervise the real estate financing sector and non-banking financial companies. The governor pointed out that, according to the new laws, there will be two primary finance sectors. The first is the real estate financing sector; the other is the non-banking financial sector which will complement the banking sector and support competitiveness in the credit market. SAMA is working on developing the implementation regulations for these two sectors, in pursuance of the powers assigned to it under these laws. In regard to the real estate finance, he added that SAMA has developed a detailed vision through a number of regulations, most notably the Implementation Regulation of the Real Estate Finance Law, which establishes detailed provisions for the law including, for example, work mechanisms, consumer rights, and mechanisms to support beneficiaries of real estate finance, in addition to the refinance regulation through mortgage backed securities, which gives the real estate financiers direct access to capital markets for refinancing, thereby reducing the cost of finance for the consumer.
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These securities will provide a new investment tool on the Saudi Capital Market.
As for the supervision of non-bank financial companies, the governor stated that SAMA is embarking on preparing regulations commensurate with the status of the non-banking financial sector to achieve the cherished objectives of the Finance Companies Control Law in terms of creating a new competitive sector for credit provision taking into account the principles of transparency, discipline and consumer protection. In respect to the I mplementing Regulation of the Financial Leasing Law, the governor confirmed that it will include substantial additions to this type of service in the domestic market to address the existing weaknesses including, in particular, the provisions governing the rights of the lessee and the lessor in a fair manner ensuring stability and sustainability, thereby reducing risk and this will be reflected on pricing and the service for beneficiaries. Finally, Al-Mubarak said that SAMA will post on its website the entire contents of these regulations to receive the views of stakeholders and beneficiaries thereof in preparation for their issuance after coordinating with relevant government agencies.
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Basel I I I in the Kingdom of Saudi Arabia Working Group (WG) to Implement Basel I I I 1. Working Group on Capital Reforms
Banks should be represented by a senior officer (Chief Financial Officer, Chief Risk Officer, Strategic Planning, etc). This WG would study Capital Reforms and examine the current position of Banks and assess what remains to be done for its full implementation.
2. Working Group on Global Liquidity Standards

This WG will examine the under-mentioned new Global liquidity Standards for monitoring, observing and implementation in Saudi Arabia. - Liquidity Coverage Ratio (LCR) - Net Stable Funding Ratio (NSFR) The WG will particularly focus on Basel I I I proposals. Banks should be represented by senior staff members from Risk Management, Treasury or Finance Department.
3. Working Group on Enhanced Risk Coverage

The WG will examine the proposals for enhanced risk coverage for implementation in Saudi Arabia including the following: - Securitization - Trading Book - Counterparty Credit Risk The WG will particularly focus on Basel I I I proposals in relation to the above items. Banks should be represented by a senior staff members from Risk Management, Treasury or Finance Department.
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4. Working Group on Enhanced Pillar 2 Reforms

This Working Group will focus on Basel I I I proposals on Pillar 2 related reform, and their impact on I CAAP, Supervisory Review process.
5. Pillar 3 Reforms
As in the past, SAMA will continue to develop any refinements in Prudential Templates and Guidance notes through the Chief Financial Officers' Committee
Major Refinements and References

Components of Basel I I I: Major Regulatory Overhaul of Regulatory and Prudential Framework Summary of Basel Committee Reforms: 1) Capital - Quality and level of capital - Capital conservation buffer - Countercyclical buffer - Capital Ratios Phased in - Regulatory deduction phased in - Non compliant instrument phased out 2) Risk Coverage - Securitizations / Re-securitizations - Trading book - Counterparty Credit Risk 3) Containing Leverage - Leverage ratio 4) Pillar 2 - Risk concentration - Off balance-sheet items - Reputational risk - Sound compensation practices
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- Valuation and liquidity risk - Sound stress testing practices

5) Pillar 3 - Enhanced exposure on securitized assets, CDO's MBS, Leverage Finance - Thematic Review in progress 6) Global Liquidity Standard and Supervisory Monitoring - Liquidity Coverage Ratio - Net Stable Funding Ratio - Supervisory Monitoring - Principles for Sound Liquidity Risk - Management and Supervision 7) Systemic Risk and I nterconnectedness "Gone Concern" Contingent capital Risk coverage Cross-border bank resolution Significant Financial I nstitutions (SIFI's)
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From : Saudi Arabian Monetary Agency To : All Banks Attention : Managing Directors, Chief Executive Officers and General Managers Subject : Quarterly Monitoring of Capital Leverage Ratio in 2011 and 2012
A major initiative announced by the Basle Committee (the Committee) in its Basel I I reform package issued in December 2010 relates to the Capital Leverage Ratio to be maintained by banks in addition to the risk based capital ratio.
In this regard, excessive leverage in banks and the banking system was a major cause of the global financial crisis notwithstanding that such banks were carrying strong Basel I I related risk based capital ratios.
Consequently, the Committee agreed to introduce a non risk based capital leverage ratio in addition to the risk based capital ratio in its overall Basel I I I Capital Adequacy regime. The Capital Leverage Ratio is designed to be simple, assists in constraining the build up of Leverage and accordingly acts as a back stop measure. This Circular is intended to provide for the definition and calculation of the Leverage Ratio which will serve as a basis for testing during the parallel run period. In this regard, the Committee intends to have a monitoring period to test a minimum leverage ratio of 3%, as well as the underlying components of the agreed definitions over January 2011 to January 2012. The testing will be carried out prior to the parallel run period (January 2013 to January 2017). Therefore, the Agency requires the completion of the attached Prudential Return to be submitted on a quarterly basis starting January 2011.
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The first quarterly return will be due in SAMA on 30 April 2011 concerning data as of 31 March 2011.
Accordingly, to facilitate the quarterly submission and testing of the capital leverage ratio, the guidance notes are attached. All Banks must review and provide their comment by 28 February, 2011.
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LEVERAGE RATIO Guidance N otes 1. Background and Objectives

- This is a simple non-risked based Capital Ratio designed to measure leverage based on Gross exposures with the exception of credit exposures which are net of specific provisions and Tier 1 capital under Basel I I I. - It provides a breaker from building excessive leverage in the Banks and the Banking systems. - The basis of calculation is the average of the monthly leverage ratio over the quarter.
2. Reporting to SAMA on a quarterly basis effective January 2011

- Monitoring Period: January 2011 January 2012 - Parallel Runs: January 2013 end 2017
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- Migration to Pillar 1: January 2018
3. Gross Exposures Schedule B, C and D

Exposures include On and Off-balance sheet items includes exposures
relating to derivatives 3.1 On-Balance Sheet

All exposures On-balance sheet, non-derivatives are measured at net of
specific provisions and credit valuation adjustments

Netting of loans and deposits not allowed Gross exposures measured through
- No netting through collaterals - All measurements in accordance with Accounting I FRS Rules - No netting of offsetting debits and credit balance through netting schemes
Items deducted from capital do not contribute to leverage and should
also be deducted from the measures of on-balance sheet exposures
All on balance sheets assets item to agree with balances with M-1.
3.2 Off-Balance Sheet including derivatives These include liquidity facilities, unconditional and cancellable commitments, direct credit substitutes, acceptances, standby letters credit, trade letters of credits, guarantees, etc. and derivatives outstanding. All of balance sheet items including derivative are to be converted to their cash equivalents utilizing credit conversion factor used for in the Basle I I framework utilizing standardized approach. Consequently, the following elements must agree.
All notional value to agree with M.1

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All cash equivalent value to agree with Q17.5.2 for off-balance sheet
items and Q17.5.3 for derivatives outstanding.
4. Capital Schedule E
The capital is to be measured on the Tier 1 capital based on Basel I I I methodology Accordingly, it should agree with Q17.3 (Tier 1) figure. It should be noted that under Basel I I I, Tier I will be amended to reflect the new definition.
5. Computation of Capital Leverage Ratio

Compute the Capital leverage ratio on a quarterly basis through capital (D) divided by gross exposures (B+C) as a simple calculation.
6. Reporting and Monitoring Period

The monitoring period will be from 31 March 2011 to December 2012. Banks are expected to report to SAMA on a quarterly basis their
leverage information as per the attached Prudential Return to track in a consistent manner the underlying components of the agreed definition and resulting ratio.
The calculation should be as of quarter end 31 March, 30 June, 30
September, 31 December of each year.

The returns should be submitted within 30 days following the quarter
end.
7. Parallel Runs
SAMA expects the January parallel runs to commence effective 1st
January 2013 and to last until end of 2017.

Based on the parallel run period any final adjustment will be done in
the first half of 2017 with a view to migrate to Pillar 1

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Additional guidance will be issued in this regard in due course.
8. Bank Level Disclosure

Bank level disclosure of the capital leverage ratio and its component will start on 1 January 2015.
9. Implementation as a regulatory measures

The actual implementation as a regulatory ratio and as a component of Pillar 1 is likely to commence from 1st January 2018.
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NUMBER 4
Mario Draghi: Interview with Le Monde

Interview with Mr Mario Draghi, President of the European Central Bank, in Le Monde, conducted by Mr Erik Izraelewicz, Ms Claire Gatinois and Mr Philippe Ricard
***
The I nternational Monetary Fund (IM F) has revised downwards its global growth forecasts because of Europe. Is there a risk of recession? No. Since the start of the year, the risks of a deterioration in the economy that we had feared have certainly materialised in part. The situation has gradually worsened, but not to the point of plunging the whole of the Monetary Union into recession. We still expect a very gradual improvement in the situation by the end of this year or the beginning of next year. Thanks to the ECB? The cuts in interest rates at the end of 201 1 and in July should produce their effects, as should the unprecedented LTROs, three-year loans to banks, which we carried out to deal with the risk of a credit crunch, a restriction or an increase in the costs for loans.
Should the ECB not do more to ease the economy, as the I MF has requested?
We are very open. We do not have any taboos. We decided to reduce interest rates to below 1% in July because we forecast that inflation would be close to or below 2% at the start of 2013.
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It now seems likely that it will fall sooner than expected, at the end of 2012.
Our mandate is to maintain price stability in order to prevent both higher inflation and a generalised, broadly based fall in prices. If we see such risks of deflation, we will act. The European Council of 28 and 29 June was positively received by the markets which since then have expressed doubts.
The Summit was a success. For the first time, it seems to me, a clear message was given: exit the crisis with more Europe.
By putting in place a roadmap to create a Union with four building blocks financial, fiscal, economic and political and delivering tangible results: a financial union, one banking supervisor, allowing the rescue funds to recapitalise banks once this supervision is in place. And a calendar for implementation. These are long-term solutions. Doesnt something need to be done about the urgency of the situation? Let me tell you about my experience. In 1988 the Delors Committee set out the route towards Monetary Union, with a goal, a timetable and commitments to be respected. This prospect resulted in the Maastricht Treaty in 1992. Italys borrowing rates were very high at the time. But as a result of its involvement in the project of Monetary Union, I taly saw an abrupt fall in its rates, before there was even a decrease in the deficit, which stood at 1 1% of GDP! This leads me to believe that if countries make firm commitments, even of a long-term nature, this has an impact in the short term.
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The ECB has been criticised for not doing more for the governments. Is the ECB waiting for government efforts to be made before acting?
This idea that there is bargaining between the governments and the ECB is a quiproquo. Our mandate is not to resolve the financial problems of countries, but to ensure price stability and to contribute to the stability of the financial system in full independence. What do you think of the growth pact held dear by Franois Hollande? It will certainly help, but we need to go further. Each country must also make efforts. Are you thinking more of structural reforms than of a Keynesian stimulus? Yes, although, in my view, the focus is too often on labour market reforms, which do not always translate into increased competitiveness because companies sometimes benefit from monopolies or situation rent. So we also need to look at the markets for products and services and liberalise where necessary to increase competitiveness. Politically, these are difficult decisions to take. A European agenda of the reforms to be undertaken would help hugely. We also need to strengthen joint decision-making in these areas at the European level. So it is a victory for liberal arguments? No. Putting an end to certain situation rents is a question of fairness, for employees and entrepreneurs, and for all citizens. What do you think of the policies followed in France?
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I welcome the continuation of fiscal consolidation, which remains indispensable, and I also welcome the emphasis on growth potential that will pave the way for recovery.
Debt reduction is vital. And the country must respect its commitment to bring its deficit back down to 3% of GDP in 2013 so that it can continue to benefit from low interest rates. You are one of the most influential men in Europe, yet you are not elected. Does this not pose a problem for democratic legitimacy? I am cognisant of the importance of being accountable for our actions. I stand before the European Parliament about ten times a year, and we are very active in terms of communication. We stand ready to do more, if our powers were to be strengthened. In the extraordinary conditions that we are experiencing, it is necessary to see the ECB take a stand beyond monetary policy for matters that cannot be addressed by monetary policy, such as high public deficits, a lack of competitiveness or unsustainable imbalances, especially where financial stability may be at risk. Safeguarding the euro is part of our mandate. When you arrived at the head of the ECB, you were considered the most German of the I talians. Is this still the case? Thats up to you to judge! We have to maintain price stability in both directions, face problems as they present themselves, and act without prejudice.
In some ways you are very German when you support the calls for political union made by Angela Merkel
Any move towards a financial, budgetary and political union is, to my mind, inevitable.
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This will lead to the creation of new supranational entities. In some countries the transfer of sovereignty I prefer to say sharing that this implies is a major stake, in others it is no problem.
But one must remember that with globalisation, it is precisely by sharing sovereignty that countries can better preserve it. In the long term, the euro must be based on a greater degree of integration. Is a Greek exit from the euro area still a leading concern?
Our unequivocal preference is for Greece to remain in the euro area.

But that is a matter for the Greek government. I t has stated its commitment, now it must deliver results. Regarding the renegotiation of the memorandum [to ease the austerity measures and reforms imposed on the country], I will not take any stance before seeing the Troikas report. On Friday, 20 July, the finance ministers of the euro area should have completed the aid plan for banks. Have they done so? Will it suffice to prevent the country from defaulting? One important point is the involvement of senior creditors of banks: the ECB believes that such involvement should be possible in the case of the liquidation of a bank. Savers must be protected, but creditors should be part of the solution of the crisis.
It is a matter of limiting the involvement of taxpayers. They have already paid a great deal!
Do you think you can go on holiday this summer in peace? I never plan my holidays ahead and I only ever go away for a few days.
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One thing is certain: I will not be going to Polynesia. Its too far. So is the euro still in danger? No, absolutely not. From the outside, analysts are seen to be imagining scenarios in which there is an explosion of the euro area. That underestimates the political capital that our leaders have invested in this union, as well as the support of European citizens. The euro is irrevocable! Having formerly worked for Goldman Sachs, what do you think of the Libor scandal? It undermines trust in one of the cornerstones of the world financial system. Just think that hundreds of trillions of euro of financial operations are based on the Libor and that in many countries all over the world people buy their homes with mortgages indexed to the Libor. The unspeakable personal behaviour and design flaws have shown once again a faulty governance of the process. Two inquiries are under way in the United Kingdom and in the United States, as well as an inquiry about the Euribor. They must shine a light on these matters. Does your time at Goldman Sachs make you uncomfortable? No, indeed, I value this experience of the world of finance and of the private sector. Obviously, there is much to do to rebuild the financial services industry after the crisis.
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Much has been done by the governments, by the regulators and by the industry itself, but much still remains to be done.
Heads of State and Government want to place the ECB at the heart of bank supervision. Are you in favour of this? The European Commission is responsible for preparing proposals on this in consultation with the ECB and the European Parliament. The fact that the central bank plays a role in banking supervision has worked well at national level, particularly in France and I taly. If this role fell to the ECB, it would work with national supervisors, counting on their considerable experience and abilities. Do you not fear a conflict of interest between monetary policy and this supervisory role? Monetary policy must be kept separate from banking supervision so that the former is not contaminated by the latter. You can build an independent structure, and at the same time benefit usefully from information provided by supervision. Would such a system have enabled the banking crisis in Spain to be avoided? A centralised system is preferable to take account of the very high degree of financial integration that a monetary union entails. On the subject of Spain, the ECB has warned the country on several occasions not to let the current account deficit get out of control and has also warned of the excessive growth of credit. But in a monetary union, the fight against property bubbles stems from macro-prudential policies carried out at national level.
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Elizabeth A Duke: Central bank cooperation in times of crisis

Speech by Ms Elizabeth A Duke, Member of the Board of Governors of the Federal Reserve System, at the Center for Latin American Monetary Studies 60th Anniversary Conference, Mexico City, 20 July 2012. *** It is a pleasure to participate in this commemorative conference on the occasion of the 60th anniversary of the Center for Latin American Monetary Studies (CEMLA). Since its establishment in 1952, CEMLA has achieved a great deal on both the policy and research fronts to promote our understanding of monetary and banking issues in Latin America and the Caribbean. The topic I have been asked to speak about today, Central Bank Cooperation in Times of Crisis, is very important. As we know, central banks typically work individually to achieve objectives for their domestic economies.
In the case of the Federal Reserve, monetary policy is conducted to achieve our statutory objectives of maximum employment and price stability.
And, of course, fostering a stable financial system is key to attaining these goals. But the experience of the past few years has illustrated first with the global financial crisis and more recently with the strains in Europe that cooperation and coordination among central banks around the world may be necessary at critical junctures to achieve these domestic objectives. In my remarks today, I will describe the evolution of the Federal Reserves policies during and after the global recession and show how many of those policies were undertaken in coordination with, or in parallel to, similar actions by other central banks.
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I will start with the monetary policy responses of the Federal Reserve and other central banks during the financial crisis.
I will then discuss the efforts that the Federal Reserve has made, often in cooperation with other central banks and international partners, to help enhance financial stability. Finally, I will focus on the challenges facing Latin American central banks, whose economies and financial systems were affected by the crisis itself, and by the responses of other central banks to the crisis.
Federal Reserve policies and coordination with other central banks

Although the financial crisis that emerged in the summer of 2007 initially manifested itself as a sharp deterioration in U.S. mortgage markets, the roots of the problem ran deeper. Indeed, the consequences of a credit boom combined with excessive leverage, mispricing of risk, and deficiencies in risk management became increasingly apparent. And given the international extent of these vulnerabilities and interconnections, the crisis quickly became global. Central banks around the world responded forcefully. From the outset, the Federal Reserve vigorously used its traditional toolkit for managing short-term interest rates. The Federal Reserve reduced the target federal funds rate from 5-1/4 percent in August 2007 to a range of 0 to 1/4 percent by the end of 2008. International coordination on policy rate decisions is rare, but in October 2008, the Federal Reserve announced a reduction in its policy rate jointly with five other major central banks: the Bank of Canada, the Bank of England, the European Central Bank, the Swedish Riksbank, and the Swiss National Bank. With clear signs of simultaneous economic slowing in many countries, this coordinated action sent a strong positive signal to financial markets
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about policymakers collective intent to mitigate the effects of the crisis on their economies.
Although not through directly coordinated actions, other central banks, including those in Latin America, were also reducing policy rates. The stresses in financial markets and liquidity shortages were severe. So, in addition to cutting policy rates, the Federal Reserve took measures designed to provide liquidity first to banks and later to other financial institutions.
A third set of measures involved the provision of liquidity to address pressures in commercial paper markets and at money market funds.
These liquidity programs were largely unwound when financial markets improved. As the Federal Reserve and other central banks worked to address liquidity shortages in their own markets, it became clear that, as a result of globalization, firms were experiencing funding shortages not only in domestic currencies, but in foreign currencies as well. In particular, dollar funding shortages appeared not just in the United States but in countries around the world, which, in turn, exacerbated pressures in U.S. funding markets. The Federal Reserve already was providing liquidity to foreign financial firms operating in the United States through its discount window and other facilities. To further address pressures in dollar funding markets and support the flow of credit to U.S. families and businesses, the Federal Reserve ultimately approved bilateral currency swap arrangements with 14 foreign central banks, including two Latin American central banks. Under these swap arrangements, in exchange for their own currencies, foreign central banks obtained dollars from the Federal Reserve to lend to financial institutions in their jurisdictions. These swap arrangements pose essentially no risk to the Federal Reserve:
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They are unwound (with a fee paid by the central bank drawing on the swap arrangement to the Federal Reserve) at the exact same exchange rate that applied to the original transaction, they are conducted with major central banks with track records of prudent decision making, and they are secured by the foreign currency provided by those central banks.
The success of these swap lines in alleviating funding pressures and reducing interbank borrowing rates is a testament to the benefits of central bank cooperation. Moreover, in addition to easing funding shortages, these swaps also helped to allay market fears they had a preventive as well as a curative role. For example, four of the central banks that participated in these arrangements Brazil, Canada, N ew Zealand, and Singapore did not end up drawing on the facilities, but it is generally believed that the existence of the lines helped prevent stresses that could have otherwise developed. As the financial crisis receded, the swap lines were closed in February 2010.
However, swap lines with several foreign central banks were reopened in response to financial strains that developed in Europe.2F3
In many countries, policy rates fell to nearly zero. With substantial economic slack remaining, these central banks faced the challenge of finding ways to further ease monetary policy. The Federal Reserve expanded its balance sheet through the purchase of longer-term Treasury securities, agency debt, and agency mortgage-backed securities. The idea was to put downward pressure on longer-term yields to spur demand and also to encourage some portfolio rebalancing toward riskier assets and loans to the private sector. More recently, the Federal Open Market Committee decided to extend the average maturity of its holdings of securities by selling
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shorter-maturity Treasury securities and buying longer-maturity Treasury securities.

This maturity extension program created additional downward pressure on long-term rates without expanding the size of the Federal Reserves balance sheet. In addition to using conventional monetary policy and balance sheet tools to provide monetary accommodation, communication is an important tool used by central banks to enhance the effectiveness of policy. At the conclusion of each meeting, the Federal Open Market Committee issues a statement of policy actions taken and the rationale for those actions. Detailed minutes are published three weeks later, and lightly edited transcripts are made public with a five-year lag. In 2011, the Chairman began holding press conferences on a roughly quarterly basis to discuss economic projections submitted by participants and actions taken at the meeting. In August 2011, the Committee statement included forward guidance that economic conditions are likely to warrant exceptionally low levels of the federal funds rate at least through mid-2013 a date that was later extended to late 2014 which put further downward pressure on longer-term interest rates. In January 2012, the Committee released a statement of its longer-run goals and policy strategy. At that same meeting, the Committee also began including participant projections of the appropriate path of the federal funds rate in the Summary of Economic Projections.
The Committee continues to discuss ways in which communication can be used to enhance policy.
While these policy moves of the Federal Reserve were not coordinated with other central banks, other central banks shared these challenges and responded in broadly similar ways to expand their balance sheets.
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For example, the Bank of England and the Bank of Japan also used large-scale purchases of medium- and long-term government securities to provide stimulus.
In addition, several other foreign central banks, including the Bank of Canada and the Bank of Japan, also more actively used forward guidance about the path of policy rates. Finally, the common challenges and problems of the past few years reinforced the importance of open discussion among the worlds central banks.
Central bank leaders draw on collective experience through discussion in such diverse international forums as the Bank for International Settlements (BIS), Group of Twenty (G-20), and CEMLA.
CEMLA is an excellent example of what can be achieved by central bank cooperation through such means as courses and seminars, international meetings, technical assistance, publication of research studies, and exchange programs.
Cooperation in areas of supervision and regulation

Central banks around the globe have focused not just on responding to the crisis, but also on working to minimize the risk of future crises by improving the soundness and stability of the financial sector. Indeed, the global financial crisis has underscored the importance of the financial stability objective of central banks. Given the global nature of financial markets and large financial institutions, coordination and cooperation among central banks and bank supervisors and regulators more generally is crucial in achieving this goal. Let me provide a few examples of such efforts. First, the crisis highlighted shortcomings in capital and liquidity requirements. Central banks with bank supervisory responsibilities have been heavily involved in designing and promoting international frameworks to address these shortcomings. The Federal Reserve has supported the Basel Committees adoption of improved capital requirements that include raising risk-weightings for
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traded assets, improving the quality of loss-absorbing capital through a new minimum common equity ratio standard, creating a capital conservation buffer, and introducing an international leverage ratio requirement.
The Federal Reserve has also supported the Basel Committees work on quantitative liquidity requirements and its work on capital surcharges for banks of global systemic importance. Another example of international cooperation on the regulatory front is the Financial Stability Board (FSB), which consists of key financial regulators around the world, including the Federal Reserve. The FSB has identified a number of challenges that international cooperation among central banks and financial regulators are helping to address. One such challenge regards over-the-counter (OTC) derivatives. To reduce the systemic risk of OTC derivatives, the G-20 leaders have agreed to require that standardized OTC derivatives be cleared through a central counterparty . Another challenge is that of cross-border resolutions, and the FSB has undertaken analytic work on how to improve the resolvability of financial firms that have a substantial international presence. The FSB has also identified and spurred cooperative work on gaps in financial data and on the so-called shadow banking system. As a bank supervisor, the Federal Reserve has cooperated with foreign bank supervisors (including other central banks) through participation in supervisory colleges, which are multilateral standing working groups of supervisors formed for the purpose of enhancing effective consolidated supervision of an international banking organization. Supervisory colleges enhance the information exchange and cooperation of home and host supervisors to help them develop a better understanding of the risk profile of a banking organization. Lastly, at the Federal Reserve we have also been working closely with other U.S. agencies in the recently established Financial Stability
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Oversight Council on the implementation of the financial stability reforms laid out in the Dodd-Frank Act.
One key aspect of this act is the focus on a macroprudential approach that pays attention to the financial system as a whole, in addition to individual financial institutions and markets. The greater emphasis on macroprudential tools has been widespread. Indeed, the Federal Reserve has participated in analyses of macroprudential tools and policies undertaken with other G-20 central banks at the BIS and with bank supervisors on the Basel Committee.
One of the reasons that coordination is required for supervision and regulation is the substantial cross-border operations of many financial firms.
The deleveraging of some global financial institutions with a significant presence in Latin America and the potential effect on economic performance serves as a stark reminder of the interlinkages of financial institutions and economies. The deleveraging of these institutions also highlights the need to coordinate across regulators and acts as a catalyst to spur greater action and information sharing.
Latin American central banks: crisis response and challenges

Earlier I mentioned how central banks around the world, including those in Latin America, lowered policy rates in response to the global financial crisis. Although the crisis developed in advanced economies, Latin American central banks, such as those in Brazil, Chile, Colombia, and Mexico, cut policy rates in 2009 as their economies were being hit hard through trade and financial linkages with advanced economies as well as through commodity price channels. Their capacity to follow countercyclical policies was in striking contrast to many previous times of stress, when policy rates could not be lowered for fear of frightening off international investors.
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The fact that these Latin American economies were able to respond by lowering policy rates and also by boosting fiscal support is a testament to the decisive steps taken to strengthen macroeconomic policies and financial systems, including improvements in the monetary frameworks under which their central banks operate.
Many Latin American economies staged quick and strong recoveries from the global recession and subsequently started to raise policy rates to try to ward off overheating pressures. Conversely, many advanced economies, with their prolonged soft recoveries, needed to continue to follow expansionary monetary policies. Accordingly, as was also the case in emerging Asia, the monetary policy stance of several central banks in Latin America, such as Brazil and Chile, diverged from those of advanced economies. The resulting rise in interest rate differentials, on top of the generally stronger growth in Latin America, helped to fuel capital inflows, which, at times, have proved challenging for the policymakers of these economies to manage. Of course, more recently, with intensification of the crisis in Europe, some Latin American countries, most notably Brazil, have again lowered their policy rates in response to concerns about slowing growth. Even within Latin America, however, the experience of economies has not been uniform. In particular, Mexico, with its stronger ties to the United States, was hit earlier and harder than many other economies in the region. Even though Mexicos recovery in the second half of 2009 was strong, it had less momentum and considerable economic slack remained in the country. As such, the Bank of Mexico did not consider it necessary to raise policy rates during its recovery period, unlike many other Latin American central banks. These developments underscore an important point that while central banks may benefit from coordination and cooperation, taking the same
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policy stance at the same time typically will not be the best choice for all central banks.
Accordingly, it is imperative for each central bank to have monetary policy tools to appropriately address domestic objectives independent of the actions of other central banks.
Conclusion
In this age of global financial integration, the Federal Reserve and other central banks often must cooperate to achieve their individual mandates. This need for coordination has been especially true during the recent crisis, when the actions of central banks working together proved very helpful in easing financial strains and boosting confidence. Indeed, closer ties and more-open lines of communication across central banks are some positive outcomes of these difficult times. This spirit of cooperation should continue as our respective central banks work to pursue monetary policies appropriate for our own economies while supporting stable financial systems around the world.
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NUMBER 5
Preliminary international banking statistics at end-March 2012

July 2012 Statistics at end-March 2012 are preliminary and subject to change. Large movements in the latest data are highlighted in the Statistical release. Data are available via the BIS WebStats interactive query tool, in PDF format and CSV files on the BIS website (locational and consolidated banking statistics), and as a single PDF file in detailed annex tables. Final statistics, with an analysis of recent trends, will be released in conjunction with the forthcoming BIS Quarterly Review, to be published on 17 September 2012.
Data at end-June 2012 will be released no later than 18 October 2012.

The locational banking statistics at end-March 2012 include for the first time the positions of banks resident in I ndonesia, ie the I ndonesian offices of domestically owned and foreign-owned banks. The addition of Indonesia brings to 44 the number of countries reporting the locational banking statistics. Indonesian data are available from end-2010.
At end-March 2012, banks in I ndonesia reported international claims of $69 billion (of which cross-border claims were $13 billion) and international liabilities of $72 billion (of which cross-border liabilities were $23 billion).
International claims and liabilities represent the sum of cross-border
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positions and positions vis--vis residents denominated in foreign currencies.

Any queries regarding the locational or consolidated banking statistics may be directed to ibfs.locational@bis.org or ibfs.consolidated@bis.org, respectively.
BIS locational and consolidated international banking statistics Preliminary data at end-March 2012
Data at end-March 2012 are preliminary and subject to change. Final data, with a detailed analysis of recent trends, will be released in conjunction with the forthcoming BIS Quarterly Review, to be published on 17 September 2012. Data at end-June 2012 will be released no later than 18 October 2012. A summary of the latest data is presented in Tables 1 and 2, and detailed breakdowns and time series data are available at www.bis.org/ statistics/bankstats.htm. Large movements in the latest data are highlighted in the commentary below. Breaks in series and major data revisions are detailed in the Annex. The locational banking statistics at end-March 2012 include for the first time the positions of banks resident in I ndonesia, ie the I ndonesian offices of domestically owned and foreign owned banks. The addition of Indonesia brings to 44 the number of countries reporting the locational statistics. I ndonesian data are available from end-2010. At end-March 2012, banks in I ndonesia reported international claims of $69 billion (of which cross-border claims were $13 billion) and international liabilities of $72 billion (of which cross-border liabilities were $23 billion).
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Locational banking statistics

Cross-border claims of banks in the BIS reporting area were little changed between end-December 2011 and end-March 2012, increasing by only $59 billion (0.2%) after adjusting for breaks in series and exchange rate movements (Table 1A). Outstanding cross-border claims stood at $30.7 trillion at end-March 2012. Credit to non-banks increased by $112 billion (1.0%) between end-December and end-March 2012. Banks continued to unwind their interbank (including inter-office) claims, albeit at a much slower pace than in the previous quarter: the decline amounted to $53 billion (0.3%) in Q1 2012 compared to a fall of $638 billion (3.1%) in Q4 2011. - Currency: US dollar-denominated cross-border claims fell by $171 billion. Euro denominated claims increased by $174 billion, driven by an increase in the cross border interbank positions of banks resident in the United Kingdom. Euro denominated claims on non-banks were almost unchanged. - Claims on developed economies: Cross-border claims on residents of developed economies dropped by $12 billion. The drop was driven by claims on banks, which fell by $18 billion in the first quarter following a $513 billion decline in interbank positions in the last quarter of 2011. The largest reductions were recorded against banks in the United States, France and Switzerland. These were largely offset by increased claims on banks in Germany and Japan.
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Cross-border claims on nonbanks in developed economies increased marginally (+$6 billion).

Claims increased mainly against non-banks in Luxembourg ($39 billion) and France ($30 billion). In contrast, claims on non-banks decreased in Germany ($32 billion), Greece ($24 billion) and I reland ($20 billion). Cross-border claims on residents of Greece totalled $101 billion at end-March 2012, compared to their peak of $251 billion at end-September 2009. - Claims on emerging markets: Cross-border claims on emerging markets increased by $84 billion, after a $77 billion decline in the previous quarter. Credit to borrowers in Asia, mainly residents of China ($54 billion), accounted for most of the increase. - Holdings of securities: Banks holdings of securities issued by non-residents increased by $135 billion, after a cumulative $617 billion decline over the previous five quarters. Holdings of non-bank securities accounted for most of the increase ($117 billion), issued mainly by residents of the United States ($55 billion), the Netherlands ($16 billion), France ($23 billion) and Luxembourg ($22 billion). Holdings of debt securities issued by non-banks in Greece, including government bonds, dropped by $22 billion.
Banks also increased their holdings of securities issued by non-bank residents of emerging economies ($10 billion), mainly in Brazil and Mexico.
- Nationality of banks: The locational statistics by nationality of the parent bank indicate that the increase in international claims, which
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sum cross-border claims and banks foreign currency claims on residents (Table 1B), was driven by British ($193 billion) and Japanese banks ($63 billion).
By contrast, international claims reported for the US and euro area banking systems fell ($198 billion and $103 billion respectively). - Cross-border funding: Cross-border liabilities to other banks and own offices increased by $57 billion and those to non-banks by $117 billion (Table 1A).
While banks in developed countries and offshore centres tended to draw down their deposits, banks in Asia (especially China, I ndia and Indonesia) and Africa and the Middle East (mainly Saudi Arabia and Nigeria) continued to place funds with banks in the BIS reporting area.
Consolidated bank claims on an immediate borrower basis

The consolidated international claims of banks in the BIS reporting area totalled $19.8 trillion at end-March 2012, representing an increase during Q1 2012 of $748 billion including the impact of exchange rate movements (Table 2A). Quarterly changes for international claims in the consolidated banking statistics are not adjusted for exchange rate movements because a currency breakdown is not reported. Exchange rate movements exaggerated the quarterly increase in reported stocks during the first quarter. In particular, the appreciation of the euro, pound sterling and Swiss franc against the US dollar between end-December and end-March 2012 contributed to an increase in the US dollar value of outstanding non-dollar claims.
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- Sectoral structure: The share of international claims on the public sector of euro area countries as a whole rose by 1 percentage point to 18%.
The exception was Greece, where the share on the public sector declined by 1 1 percentage points to 44%, reflecting sales and write-downs of public sector debt during the quarter. The share of interbank business in worldwide international claims was unchanged at 40%.
- Maturity structure: The share of short-term claims was unchanged at 51% of outstanding international claims at end-March 2012, but there were differences across borrowing regions.
Short-term claims on a number of oil-producing countries in the Middle East and Africa increased noticeably. Short-term claims on Cyprus, which had represented about 60% of international claims on that country in the latter half of 2011, fell to 48% at end-March 2012. - Local office positions in local currency: Local currency claims of banks foreign offices were up 2% after adjusting for currency movements. The largest increases were reported vis--vis Germany, Japan and the United Kingdom. Banks local funding in local currency increased by almost 4%, driven by positions in the United States, Japan and Spain.
Consolidated claims and other exposures on an ultimate risk basis

On an ultimate risk basis, which takes account of net risk transfers across borrowing countries and sectors, other potential exposures stood at $16.6 trillion at end-March 2012.
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While in unadjusted terms they were largely unchanged compared to end-2011, exchange rate movements masked a decline.
The share of guarantees extended (including credit default swaps sold), which account for 55% of other potential exposures, was unchanged, compared with the positions at end-2011 overall. The share of derivatives contracts (24% of the total) was down by 1 percentage point. As a counterpart to these moves, the share of credit commitments (which account for 21% of other potential exposures) was up by 1 percentage point overall.
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NUMBER 6
Report on the Role of Insurance Guarantee Schemes in the Winding Up Procedures of Insolvent Insurance Undertakings in the EU/ EEA 1. Introduction
This report is prepared as part of E IOPAs input to the European Commissions policy making on I nsurance Guarantee Schemes (IGSs) and as specified in the mandate of the Task Force on I nsurance Guarantee Schemes. The purpose of the report is to summarise the findings of a mapping exercise on the role of the I GS in the winding up procedures of insolvent insurance undertakings across the EU/ EEA. A questionnaire was used for the purpose of this exercise and sent to 30 EU/EEA states. Member States responded. Where references are made to the majority or minority of Member States, this refers to the number of respondents rather than the full membership of the EU/EEA. For the purpose of this report, an I GS is a body that provides last resort protection to consumers when insurance undertakings are unable to fulfil their contractual commitments. Motor insurance guarantee schemes are covered in this report only to
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the extent that they provide cover in such winding up situations.

An I GS may have a wide ranging scope, covering life, non life or both types of insurance contracts. In the majority of Member States jurisdictions, only certain classes of insurance contracts are covered.
2. Topics covered
The following areas are covered in this report: (1)Types of IGSs (the diversity of IGSs in the EU / EEA, cross border IGS membership and the permanent or ad hoc character of the I GS); (2)Role of the I GS prior to insolvency (formal or informal pre-warning systems, free exchange of information between the I GS and the supervisory authority and preventative measures taken by the I GS); (3)Role of the IGS in the insolvency process (deciding when to intervene, options for exit from insolvency, continuance of coverage, criteria taken into account by an I GS for portfolio transfer, role of the I GS when an insurance undertaking becomes insolvent, cross-border co-operation and co-ordination arrangements); (4)Role and interaction of other bodies with the I GS (role of the supervisory authority, differences between life and non-life insurance insolvency and their treatment by the supervisory authority); (5)Role of the court in winding-up proceedings when the insolvency procedures are initiated and/ or throughout the insolvency or the winding-up procedures; and (6)Role of the I GS in the claims process (time limit for claims payments and observed payment times, treatment of unearned premia, funding payment of claims, rights of policyholders to take the I GS to court, payment of claims upfront and reimbursement, subrogation rights of the IGS, other rights and rights of creditors).
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3. Summary of findings
3.1 Types of IGSs 3.1.1 Diversity of I GSs in the EU/ EEA Only two respondents (IS and SE) reported having no I GS at all. Two Member States have a dedicated I GS for accidents at work (in certain jurisdictions this risk is covered by a public social security scheme). Seven respondents have a life insurance I GS and five have a non_life insurance IGS. Five have I GSs which cover both sectors. This sample of Member States is not representative and cannot lead to an obvious conclusion concerning Member States appetite to have separate or common I GSs. The conclusion to be drawn from this is that although nearly all Member States provide some form of coverage, comprehensive protection is scarce and cover is often limited to the motor insurance sector. 18 respondents reported having an I GS which covers motor insurance. Of these 18 countries, nine have reported that the I GS covering motor insurance is the only I GS in their country. Motor insurance guarantee schemes are well developed throughout Member States and some of these countries have extended the scope of their guarantee funds set up under the EU Motor Directives to include insolvency cases. 3.1.2 I GS membership cross border Member States were asked whether a foreign insurance undertaking (3rd country insurance undertakings or insurance undertakings established in
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Member States or both) with branches could become a member of an IGS in their jurisdiction (either on a voluntary or compulsory basis).
For life and non-life IGS (1 1 respondents), the answers can be divided into two groups, for branches from third countries and for branches from EU/EEA Member States: - For branches from non EEA third countries, eight respondents reported that these insurance undertakings can (sometimes subject to certain conditions) become a member of an IGS, either on a voluntary or mandatory basis. - For branches from EU/EEA Member States: _ four reported that such insurance undertakings cannot become a member of their I GS; _ three answered that they can become a member of their IGS (either on a compulsory or voluntary basis); and _ in a few Member States, branches of insurance undertakings established in other Member States are required to become members of the host state I GS only where the I GS in the home state does not provide equivalent protection to policyholders established in the host Member States. These answers may reflect the principle (home or host state principle) chosen by the countries. For motor I GS, 13 respondents (of 18 Member States concerned) answered that foreign companies must become members of their I GS.
In summary, it appears that where cross-border operations from third countries have been addressed (eight respondents), Member States are more likely to require mandatory membership for third countries insurance undertakings operating in their jurisdictions, whereas for operations from other Member States, membership is often on a voluntary basis.
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3.1.3 Permanent or ad hoc character of the I GS

Almost all I GSs are active at all times. However, there seems to be a variety of definitions of what active means, ranging from being fully operational permanent institutions to a more reduced presence (that is to say only the legal framework exists without the administrative functions in place). All life insurance IGSs are operational at all times. Five out of six non-life IGSs are also operational at all times.
3.2 Role of the IGS prior to insolvency

3.2.1 Formal or informal pre-warning systems when an insurance undertaking will soon be subjected to liquidation proceedings (a) Pre-warning an I GS Pre-warning an IGS that an insurance undertaking will soon be subjected to liquidation proceedings is important for organisational and financial reasons. Keeping the I GS informed of any potential insolvency enables them to be better prepared to perform their function. Although only FR reported the existence of a legal provision between the supervisors and the I GS, various Member States: - suggested the existence (or potential existence if needed) of an informal flow of information between the supervisor and the I GS before the decision to wind up the insurance undertaking (four Member States); - emphasized the absence of legal constraints to such flow of information, or the empowerment of the supervisor to deliver such information (four Member States).
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Eight Member States reported an absence of a pre-warning system. Two Member States noted that the supervisory authority shall warn the IGS of the withdrawal of the insurance undertakings authorisation.
Overall, Member States reported that such pre-warning systems are not as widely used as in the US, where there is a very active but informal system of pre-warning between guaranty associations (GA) of probable insolvencies of insurance undertakings which could affect multiple states. (b) Pre-warning of the supervisory authority
Besides the supervisors regular monitoring of the insurance undertaking, (and the insurance undertakings obligation to inform the supervisor of non-compliance with financial requirements), in general the insurance undertakings decision to liquidate itself (voluntary dissolution or petition to the court) is subject to authorisation/ non-opposition by the supervisor.
3.2.2 Free exchange of information between I GSs and the supervisory Authority Member States were asked whether an I GS and the supervisory authority could freely exchange information necessary to perform their duties, particularly when the supervisory authority detects problems with an insurance undertaking which is likely to result in intervention by the scheme. 12 Member States reported the existence of a free exchange of information (without legal or other barriers) between the supervisory authority and the IGS. In some Member States such exchange is due to institutional aspects the fact that the supervisory authority is the manager of the I GS (noted by two Member States), or the supervisor of the I GS (observed by three Member States). Three Member States emphasized that such flow is not blocked by professional secrecy norms because the need to comply with the secrecy
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regime would have been communicated to the entity which receives the information.
Only one Member State reported that such flow of information is based on a formal agreement. 3.2.3 Preventative measures taken by the I GS Although no Member State reported that their IGS has powers to act on a preventative basis, a few noted that their IGS can take certain measures to enable insurance undertakings to continue to meet their contractual obligations under certain conditions: In I E, if the non-life insurance undertaking averaged over 70% of their business in I E, (over the three years prior to the appointment of the administrator) the Accountant of the High Court can sanction payments from the I GS to enable an administrator to carry on the business of the non-life insurance undertaking and run the business as a going concern. In the UK, where an insolvency event has occurred or the regulator determines that the insurance undertaking cannot pay claims against it, the I GS can seek to secure continuity of cover. This can include giving assistance to the insurance undertaking to enable it to continue to effect contracts of insurance or to carry out contracts of insurance, if certain criteria are met. The criteria are that it would be generally beneficial to the eligible claims covered by the proposed assistance and, where the cost of providing assistance might exceed the cost of paying compensation, any additional cost is likely to be justified by the benefits.
The I GS cannot exercise these powers on a preventative basis to keep an insurance undertaking solvent.
In conclusion, the I GSs appear to be more of a last-resort scheme, intervening only when all other measures have been exhausted, rather than competent to act on a preventative basis.
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3. Role of the IGS during the insolvency process

1.Deciding when to intervene When asked which authority takes the decision on when to intervene when an insurance undertaking becomes insolvent, about half of the respondents reported that this is the responsibility of the supervisory authority. However, the situation is not harmonised throughout Member States and/ or sectors. For life and non-life I GS, seven countries have reported that the supervisory authority generally decides when to intervene, when an insurance undertaking becomes insolvent. In one Member State, only the court can initiate the procedure. In another, the procedure is initiated by its I GS. One Member State also reported that either the court, the supervisory authority or the insurance undertaking can initiate the procedure. For motor I GS, seven Member States reported that the decision to intervene is the responsibility of the supervisory authority; for five this is the responsibility of the court; for three, it is the I GS and for two Member States, the insurance undertaking. 2.Options for exit from insolvency e.g. schemes of arrangement or transfer of business Although there appears to be no mechanism for exit from insolvency, six Member States noted that certain remedial measures such as a partial or total portfolio transfer may be possible. One Member State also reported that the terms of the insurance agreements can be amended.
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3.3.3 Continuance of insurance cover

Member States were asked whether their I GS provides continued insurance coverage once the winding-up begins. 14 Member States reported that their I GS does not provide for continuance of insurance cover once the winding-up begins although one noted that portfolio transfers may have the similar effect for policyholders as their contracts would still be in place. In other Member States (nine in total), the I GS provides continuance of cover once the winding up of the insurance undertaking begins. This seems to be more prominent in the case of life business (as in the US law model) and compulsory insurance. 3.3.4 Criteria taken into account by an I GS for transferring the portfolio of a failing insurance undertaking Few Member States reported having criteria for transferring portfolios of business. For some Member States, it falls outside the scope of their I GS to be involved in portfolio transfer. For the five Member States that reported that their I GSs may be involved in portfolio transfer, four Member States noted that various criteria must be met: In DE, both for the life and health insurance guarantee schemes, the portfolio transfer is the solution of last resort, i.e. it is taken into account when other measures designed to safeguard the interests of the insured are deemed insufficient. In I E, the court appointed administrator shall have all such powers necessary for their functions in relation to the insurance undertaking.
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This would extend to powers over portfolio transfers, albeit that any such portfolio transfer would require prior approval from the supervisory authority and the High Court.
In PL, the IGS may grant a loan to the insurance undertaking taking over the compulsory insurance portfolio of the insurance undertaking being wound up, up to the amount of technical provisions calculated in respect of the taken over insurance portfolio. In the UK, where an insolvency event has occurred or the regulator determines that the insurance undertaking cannot pay claims against it, the I GS has duties and powers to seek to secure portfolio transfer. The objective is to protect consumers rather than insurance undertakings. The courts would exercise oversight. For life insurance undertakings the I GS must, and for general insurance undertakings the I GS may, seek to secure a transfer and also provide funds to support the transfer in cases where: - it is reasonably practicable to secure a transfer; - a transfer would be beneficial to policyholders; and - where the costs exceed the cost of paying compensation, any additional cost is likely to be justified by the benefits. 3.3.5 Role of the I GS when an insurance undertaking becomes insolvent Generally the vast majority of Member States I GSs are either directly responsible for payment of claims (15 Member States) or for supporting or ensuring such payments are made (two Member States), or both (one Member State). However, payment arrangements as well as other duties of IGSs when an insurance undertaking becomes insolvent vary significantly across Member States.
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The main differences are:

- some I GSs can either pay compensation or seek portfolio transfer; - assessment of claims can be the responsibility of: the court or the liquidators appointed by the court; the insurance undertakings of the claimants; or the I GS; - the IGS may be responsible for auditing claims_assessment processes (to ensure claims are being handled effectively and/ or economically); - the IGS may grant a loan to the insurance undertaking taking over the transferred portfolio; and - the payment may be possible only after the insurance undertakings authorisation has been revoked by its supervisory authority. 3.3.6 Cross-border cooperation and coordination arrangements Member States were asked what cross-border dimensions are taken into consideration by their IGS when an insurance undertaking is being wound up. Respondents mostly referred to the European Passport, with situations differing largely with regards to the home state or host state principle adopted. For life and non-life I GS, most Member States concerned reported no actual or potential cross-border dimensions. Only three countries reported cross-border dimensions such as direct contact between supervisory authorities or the relationship between the IGSs.
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For IGS following the host state principle, or mixed home/ host principle, cross-border dimensions consist mainly of claims payments.
For motor IGS, seven Member States stated that cross-border dimensions are not taken into account besides what arises from the international nature of the coverage of compulsory motor insurance (obligation of payment irrespective of the accident location). In its report (CEIOPS_DOC_18/09) CEIOPS Input to the EC work on Insurance Guarantee Schemes, CEIOPS highlighted the importance of harmonising the geographical scope of an I GS, and expressed a preference for the home state principle, so that insurance undertakings are covered by the I GS in the state where the insurance undertaking was authorised. This includes the insurance undertakings branch and service businesses throughout the EEA.
3.4 Role and interaction of other bodies with the IGS

3.4.1 Role of the supervisory authority when an insurance undertaking becomes insolvent Member States were asked whether the supervisory authority was the competent authority for the winding-up of an insolvent insurance undertaking. Under Directive 2001/17/EC on the reorganisation and winding-up of insurance undertakings, competent authorities of the Member States are responsible for deciding on the commencement of winding-up proceedings.
The competent authorities may be judicial or administrative depending, upon Member States legislation.
Insolvency laws and in particular insolvency procedures appear to vary quite significantly throughout Member States.
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Accordingly, Article 9 of the said Directive states that the decision to commence winding-up proceedings for an insurance undertaking shall be governed by the laws, regulation and administrative provisions applicable in its home state.
Responses indicated that the supervisory authority plays a pivotal role when an insurance undertaking becomes insolvent. Nine Member States reported that the supervisory authority has sole responsibility for decisions regarding re-organisational measures (transfer of portfolio, stay in payments, etc).
Three Member States reported that the courts authorisation is required.

Most replies however, indicated that the liquidation procedure is judicial and governed by the courts (20 Member States), although four Member States noted that there are cases where the procedure is administrative, with the supervisory authority deciding the timing, nominating the liquidator and monitoring the merit and the legality of the proceedings. In the case of judicial liquidation: - in some Member States, winding-up proceedings cannot be initiated without the consent of the supervisory authority; - the supervisory authority often has the power to advise the court on the nomination of the liquidator (noted by nine Member States); - two Member States noted that a condition of the court issuing the liquidation decree is the supervisory authoritys withdrawal of the insurance undertakings authorisation.
Most replies also gave prominence to the role of the liquidator (administrator of the insolvency, or bankruptcy) who is responsible for the day-to-day activities of the liquidation procedure.
The liquidator is appointed by the competent authorities as referred to above.
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One Member State emphasized the fact that the liquidation does not prevent the supervisory authority from exercising its general power/ duty to supervise the insurance undertakings activities. The diversity of regimes across Member States indicates that any future proposal for EU harmonisation regarding IGS should leave the role of the supervisory authority to the individual Member States. However, the diversity of situations also highlights the importance of addressing the issue of cross-border communication between supervisory authorities in any future directive. 3.4.2 Differences between life and non-life insurance insolvency and their treatment by the supervisory authority Member States were also asked whether there were significant differences between life and non-life insurance undertakings with regards to the winding-up procedures and the role of the supervisory authority. The majority (15 Member States) stated that no apparent differences existed, with a few indicating minor differences (for example one Member State observed that the court has greater powers over the continuation of life business and the terms of life insurance contracts). The replies indicated that Member States do not generally treat the insolvency of life or non-life insurance undertakings differently. There is nothing in the winding-up procedures therefore that would prevent a potential directive on I GS from addressing both sectors at the same time, and contributing to the creation of general IGSs for enhancing consumer protection and confidence in financial services.
3.5 Role of the court in winding-up proceedings

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1.
During winding-up proceedings
Directive 2001/17 /EC on the reorganisation and winding-up of insurance undertakings sets out the provisions which must be followed by insurance undertakings that are being wound up. Article 9 of the said Directive also provides that the winding-up proceedings and their effects shall be governed by the laws, regulations and administrative provisions applicable in each home Member State unless otherwise provided in Articles 19 to 26 of the same directive.
In line with this approach, it appears that most Member States referred to the general laws relating to the insolvency of companies when describing the role of the court in this question.
2. When the insolvency procedures are initiated
In most Member States, the court issues an order initiating the insolvency procedure, unless it is a voluntary winding-up procedure. Most Member States (17) reported that the role of the court is to ensure that orderly and effective insolvency procedures are in place. The court is responsible for initiating liquidation proceedings, issuing a bankruptcy decree and appointing a person responsible for the windingup of the insurance undertaking, usually referred to in Member States legislation as a liquidator, receiver, administrator or trustee. Throughout the winding-up process, the courts role is mainly to monitor and supervise the process, to oversee the actions and arrangements proposed by the trustee, receiver or liquidator and to approve reports relating to the winding up. The court monitors the process and is referred to when there is disagreement or the need for direction. We note that the role of the court in winding-up proceedings as reported in the majority of responses, is akin to the US regime, with the distinction
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that in the US the supervisory authority (the insurance commissioner) is itself the liquidator appointed by the court.
A few Member States (four) stated that the court is not involved in winding-up procedures. One Member State reported that the court plays no role in the I GS tasks as a portfolio transfer takes place before the insurance undertaking becomes insolvent, whilst another noted that, since the process is entirely conducted by the supervisory authority, the role of the court is merely as a last resort to resolve conflicts regarding the verification, valuation, graduation and payment of claims by the liquidation procedure.
3.6 Role of the IGS in the claims process

3.6.1 Time limit for I GS pay-outs and observed payment times Member States were asked whether there are any specific time limits for the I GS to pay claims. Only six Member States reported having a prescribed time limit: I n four Member States the time limit is fixed by law and in two Member States, by the supervisory authority. The time limit is triggered by declaration of bankruptcy, request/ report of claim or end of calculation (reported by two Member States in each case). The time limit varies from 15 days to three months. In some cases the limit can be extended for another two or three months.
One Member State noted that the time period starts from when the liability of the insurance undertaking and the amount of the claim have been established. Most of the Member States did not provide any information about the payment times observed.
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Some respondents indicated that they cannot report time limits due to no (or only a small number of) insolvency cases with the involvement of an IGS.
One respondents experience is that the timescales for winding up of insurance undertakings and payments of dividends are lengthy. Only N orway reported observed time limits from one week to three months (from when the individual claim has been regulated/ adjusted by the insolvency administrator) in practice.
2.
Treatment of unearned premia
Member States were asked whether their I GS treats unearned premia differently from other insurance claims. About half of respondents reported that the treatment of unearned premia is not applicable to their I GS, as their scheme provides no cover for unearned premia, or in other cases Member States only have schemes for motor insurance which cover claims but not unearned premia. A number of Member States treat unearned premia on equal terms with other insurance claims (six Member States) although a few treat them separately (two Member States). Two Member States reported no relevant legal provisions. 3. Funding payment of claims
Member States were asked what happens if there are insufficient funds in the I GS to pay all claimants.
Some Member States just explained the way the I GS is financed and reported caps for the coverage without giving a precise answer to the question. Others reported a range of solutions, which include a proportionate reduction of claims on a pro rata basis, full payment of all claims with additional ex post contributions by I GS members, loans (with and
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without state guarantee for the repayment), the ability to request borrowing from the government/ other sources and additional public money.
The most reported solution is additional contributions by scheme members. 4. Rights of policyholders to take I GS to court
Most Member States (15) reported that policyholders have only general legal rights to contact the I GS or to take it to court. Five Member States with only a motor I GS stated that third party claimants/ injured party/victims have those rights rather than policyholders. 5. Payment of claims upfront and reimbursement
The vast majority of IGS have the ability to pay out claims up front: In Member States with life, non-life or more general schemes in place, 1 1 out of 12 IGSs may pay out claims upfront. Eight Member States with an I GS exclusively for compulsory motor insurance reported that the scheme has the ability to pay out claims upfront. However, when intervening in case of the insolvency of an insurance undertaking or in the case of a winding-up, the vast majority of IGSs have powers to pay out claims up front (in the sense that they offer payment to the clients once each claim has been established), which is in the interest of policyholders.
3.6.6 Subrogation rights of the I GS
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Providing an I GS with subrogation rights allows the I GS to take over the rights of policyholders against the insurance undertaking and therefore receive recoveries against compensation payments it has made directly.
A majority of respondents indicated the existence of subrogation rights (20 Member States) without commenting specifically on whether the I GS is subrogated with the same priority as direct insurance claims. It seems appropriate for a directive to provide for IGSs to have subrogation rights.
It also appears beneficial to provide I GSs with the right to benefit from the same level of priority as policyholders (i.e. preferential treatment whereby the policyholders claim is prioritised above most other creditors).
Unless the IGS takes over the same creditor priority as held by the policyholder, it will be unlikely for the I GS to recover its compensation payments. This will increase the I GSs funding requirements. This also means that the I GS will effectively be subsidising the payment of other creditors and giving them a greater chance of getting their money back (which should not be the purpose of the I GS). 3.6.7 Other rights of the IGS including apply to the court for a winding-up Order Another important right that some I GSs may have is the right to be a member of the creditors committee.
The majority of respondents stated that their I GSs have no specific rights in this regard (13 Member States).
Four Member States reported that this question is not applicable. One Member State reported that their I GS may appoint a member in the creditors committee, whilst another noted that the I GS has the
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expectation, but not the right, to have a representative as a member of the creditors committee.
In another, the IGS or other creditors may be appointed in the committee by the judge commissioner. Four Member States noted that their I GSs have general/ standard rights in their capacity as creditors of an insurance undertaking (e.g. to be a member of the creditors committee, to present proposals, to file petitions against decisions of creditors meetings, to be heard by the court and to file appeals against court decisions). 3.6.8 Rights of creditors Six Member States reported that creditors have rights to be heard by the court.
4. Conclusions
The findings of the report highlight the lack of harmonisation in a number of areas such as: - which authority takes the decision to intervene when an insurance undertaking becomes insolvent; - the ability to provide for portfolio transfer; - a lack of pre-warning system when an insurance undertaking is in difficulty; and - the role of the supervisory authority when an insurance undertaking becomes insolvent. Overall the report highlights the diversity of regimes across Member States and the importance of cross-border communication between Member States. The report also illustrates how Member States have exercised their discretion in implementing Directive 2001/17/ EC on the reorganisation
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and winding-up of insurance undertakings to fit with their legal and institutional framework.
This points to the potential need for any future directive on IGS to provide Member States with sufficient flexibility to adapt the directives requirements to fit with their national framework.
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NUMBER 7
Developments in Kenyas insurance industry sector
Remarks by Prof Njuguna N dungu, Governor of the Central Bank of Kenya, at the launch of Continental Reinsurance brand and products, Nairobi office, Nairobi
Important parts
Firstly, allow me to spend a few moments to reflect upon the future of the Kenyan insurance industry based on my experience, and to provide some thoughts and advice on where reinsurers such as Continental Reinsurance can contribute additional value in the sector. The Kenyan insurance market wrote KShs. 100 billion of Gross Direct Premiums in the year 2011. It has grown at an average rate of 16% p.a. over the last 5 years. The market comprises of 45 insurance companies, transacting long-term and short-term insurance business. In addition, there are over 140 insurance brokers operating in the Kenyan insurance market. Competition is strong and therefore clear market positioning is essential. I am standing here today wearing two hats: one, as Regulator of the banking sector and secondly, as a Board Member of the I RA. I have seen that there is a strong requirement for products that are driven by a real need from customers products that appeal to a specific demand. I am happy to note therefore that the industry is addressing the matter of innovation and are designing new products particularly targeting the lower market.
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This is the way in which the insurance industry will be able to enhance the level of financial inclusion among the population.
By way of example, let us look at the agricultural sector which, comprises a vital 80% of our economy with a 26% contribution to GDP. Insurance and reinsurance should play a bigger role in the development of the agricultural sector in Kenya. I am sure that, Weather-index micro insurance schemes are making a measurable impact where payouts enable farmers to recover from what would otherwise be financial disaster. For instance in August last year, 3,380 farmers received compensation for the loss of their crops, totalling approximately KShs. 150 million. The transfer of weather risk away from these farmers to the international insurance markets strengthens the resilience of farmers and agricultural businesses to weather impacts. It provides additional and important security which also supports our Kenyan economy. A great benefit for the development of micro insurance is the deepening of penetration per capita. Currently most micro insurance schemes are run as small pilot type arrangements and continue to face a number of regulatory and operational challenges. I am informed that a policy framework paper has now been developed by the micro insurance working group set up by the I nsurance Regulatory Authority and the same has been forwarded to the Ministry of Finance for further attention. In this regard, the Minister during his budget speech recognized micro insurance as a standalone class of insurance, giving it the prominence that is deserves.
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Ladies and gentlemen, insurance penetration in Kenya is 3% high by African standards, but with a long way to go still.
I appeal to leaders and operators in the sector to harness the growth opportunities and to think forward, to think innovatively. For example, the recent discovery of oil and gas in Kenya has marked a significant opportunity for this sector. We have had the chance to see how other African countries have tackled the discovery of important natural resources, and the onus is now firmly on us to learn from their successes, and from their mistakes. We know, for example, that there is long way to go to prepare our country for the technical intelligence required to provide security around the multitude of issues that accompany a discovery of this kind. I request the insurance and reinsurance market to test out the structures in place for oil and gas insurance. We need to be prepared as an industry and as a country in order that we safeguard against future potential issues resulting from the mining of our natural resources. In this regard Mr. Chairman, I wish to applaud Continental Reinsurances steps in progressing product innovation and development including Oil and Gas, and look forward to learning from your experience. Lastly, ladies and gentlemen, I urge the insurance industry to position itself for the economic integration in the East African Union.
As you are already aware, the common market protocol of the East African Community (EAC) creates a big market full of opportunities.
This is the way to go in terms of integration and expansion within the EAC and beyond.
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Indeed todays occasion is a realization of that spirit as we congratulate Continental Re (a Nigerian company) on their authorization to transact fully reinsurance business in Kenya.
This trend is the beginning of what I predict will be the future of the insurance and reinsurance market in Africa-spreading across countries with free movement and with the opportunity to exploit full cross-border growth. I therefore challenge the industry to prepare for this eventuality in a timely manner. Once more ladies and gentlemen, I would like to thank the Continental Reinsurance company on this auspicious occasion and to wish them all success. Thank you.
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NUMBER 8
The Prospectus Directive - Update

The Prospectus Directive 2003 /71/EC (PD) and the Commissions Regulation on Prospectuses (EC 809/ 2004) became effective on 1 July 2005. The Prospectus Directive and accompanying Regulation establish a harmonised format for prospectuses in Europe and allow companies to use the same prospectus prepared for admitting securities to trading on their home market to admit securities to any number of further European markets without having to re-apply for approval from the local regulator. In so doing, the intention is to help companies avoid the inherent delays and cost that any reapplication process would involve. The new legislation also sought to ensure investors had access to more consistent and standardised information that would enable them to compare more effectively the various securities offers available from a wide number of European companies. 2. The prospectus legislation is made up of the following European legislation: a) Directive 2003 /71/EC, which was adopted in November 2003. It is a framework Level 1 Directive which has been supplemented by the Directive 2010 /73 /EC (see Level 1 legislation in b. below) and technical implementing measures (see the Level 2 legislation below).
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b)Directive 2010/73/ EC, which was adopted in November 2010.

It is a Directive amending Directive 2003/ 71/EC. I t entered into force on 1 July 2012. c) Implementing Regulation 809/ 2004 (Level 2 legislation) d)Implementing Regulation 211/2007. (Level 2 legislation) I t is a Regulation amending Regulation 809 /2004. e) Implementing Commission Delegated Regulation (EU) N o 486/2012 (Level 2 legislation). It is a Regulation amending Regulation 809/2004. It entered into force on 1 July 2012. f)Draft Commission Delegated Regulation (EU) No / .. of XXX amending Regulation (EC) No 809/ 2004 as regards the consent to use the prospectus, the information relating to an underlying index and the requirement for a report prepared by independent accountants or auditors accompanying specific financial information (draft COM DR 2) which was adopted by the Commission on 4 June 2012. This Delegated Regulation has not yet entered into force. It is subject to the right of the European Parliament and of the Council to express objections, in accordance with Article 290 (2) of the Treaty on the Functioning of the European Union and Article 24c of the amended Prospectus Directive. 3. ESMAs predecessor (CESR) produced a series of questions and answers (Q&A) based on questions received through CESRs PD Q&A mechanism. The Q& As reflected common positions agreed by CESR Members. They were one of the tools used by CESR to elaborate on the provisions of certain EU legislation, thereby fostering supervisory convergence.
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4. Similarly, ESMA is required to play an active role in building a common supervisory culture by promoting common supervisory approaches and practices.
In this regard, ESMA will continue to develop Q& As as and when appropriate.
I I . Purpose
5.The purpose of this document is to promote common supervisory approaches and practices in the application of the PD and its implementing measures. It does this by providing responses to questions posed by the general public and competent authorities in relation to the practical application of the PD. 6.The content of this document is aimed at competent authorities under the PD to ensure that in their supervisory activities their actions are converging along the lines of the responses adopted by CESR, and now ESMA. However, these responses are also meant to give market participants an indication of what constitutes proper implementation of the PD rules. The answers are intended to help issuers of securities by providing clarity as to the content of the PD requirements without necessarily imposing an extra layer of requirements.
I I I. Status
7. Warning: On 1 July 2012 the amended Prospectus Directive and Commission Delegated Regulation entered into force. Therefore some Q&As may no longer be valid or contain references to legislation that is incorrect.
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ESMA is in the process of updating and revising the Q&A document accordingly.
NEW 8.The Q&A mechanism is a practical convergence tool used to promote common supervisory approaches and practices under Article 29(2) of the ESMA Regulation. 9.Therefore, due to the nature of Q&As, formal consultation on the draft answers is considered unnecessary. However, even if they are not formally consulted on, ESMA may check Q&A responses with representatives of E SMAs Securities and Markets Stakeholder Group, the relevant Standing Committees Consultative Working Group or, where specific expertise is needed, with other external parties. 10.ESMA will review these questions and answers to identify if, in a certain area, there is a need to convert some of the material into ESMA guidelines and recommendations. In such cases, ESMA Regulation Article 16 procedures will be followed. 11.The following Q&As have been deleted due the entry into force of new legislation: Q&A no 56. NEW 12.The views of the Commission Services on some of the issues discussed in this Q&A were sought.
However, the Commission Services note that only the European Court of Justice can give a legally binding interpretation of provisions of EU legislation.
Moreover, the views expressed in the paper do not bind the European Commission as an institution, and the Commission would be entitled to
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take a position different to that set out in this Q& A guide in any future judicial proceedings concerning the relevant provisions.
13. At the Commissions request, CESR developed CESRs recommendations for the consistent implementation of the European Commissions Regulation on Prospectuses n 809/2004 (CESR /05-054b) which has proved useful to market participants in addition to this Q&A which aim to provide greater clarity for issuing companies regarding the provisions to disclose information on a range of areas and to promote greater transparency in the way supervisors apply the Regulation, without imposing further obligations on issuers. CESR consulted market participants during the development of these recommendations and the responses and feedback statement can be accessed on ESMAs website (http:/ / www.esma.europa.eu/ ). CESRs recommendations for the consistent implementation of the European Commissions Regulation on Prospectuses n 809/ 2004 (CESR/ 05-054b) were published on 10 February 2005. On 23 March 2011 ESMA published an update of these recommendations regarding mineral companies (ESMA/2011/ 81). The responses and feedback statement for this update can also be accessed on ESMAs website.
IV. Questions and answers

14. CESR published its first Prospectus Q&As in July 2006 and last updated them in April 2011. This document includes all the Q&As previously adopted by CESR, as amended, and will be edited and updated as and when new questions are received. The date each question was last amended is included after each question for ease of reference.
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15. Questions on the practical application of any of the PD requirements may be sent to the following email address at ESMA Info.ESMA@esma.europa.eu.
Q) I s it possible to omit the risk factors section from the prospectus on the basis of Article 23.4 of the Prospectus Regulation?
A) No, the prospectus must always include a description of the risk factors.
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NUMBER 9
Press Conference by Tadahiro Matsushita, Minister for Financial Services

[Some Opening Remarks by Minister Matsushita] Yesterday, I visited the Tokyo Stock Exchange. As I told you in door-step conversations yesterday, I held various discussions. At today's cabinet meeting, a cabinet order to partially amend the Order for Enforcement of the I nsurance Business Act was formalized. This cabinet order specifies the matters announced on January 6 with regard to transitional measures that are included in the Act to Amend the Insurance Business Act, which was enacted in March 2012, and concern the amount of insurance claims that may be underwritten by small-amount, short-term insurance providers.
[Questions & Answers]

Q. I have two questions. First, the Japanese Bankers Association (JBA) started considering revisions to the calculation method of TIBOR (Tokyo I nterbank Offered Rate) following the scandal over the manipulation of LIBOR (London Interbank Offered Rate). Regarding TIBOR, a foreign securities company's use of an illegal practice was exposed last year. What measures does the Financial Services Agency (FSA) intend to take to prevent illegal acts related to TIBOR and what are your thoughts on the unfolding LIBOR scandal? A. As for the LIBOR scandal, we regard it as a very serious problem. We are keeping close watch on it.
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As for your question concerning revisions to TIBOR, the JBA is responsible for determining the standard for managing TIBOR, so the FSA is not in a position to make comments.
I understand that in response to inquiries from media organizations, the JBA has replied that nothing has been decided with regard to revisions to TIBOR. I believe that it is important that the JBA, which is responsible for publishing TIBOR, take appropriate and timely actions regarding the management of TIBOR.
I think that the management of TIBOR and the illegal manipulation of interest rates are different matters.
The FSA has already been checking individual financial institutions' internal control systems through inspection and supervision. If a problem is recognized with regard to a financial institution's internal control system, we will take appropriate actions as needed. Q. I have one more question, which concerns insider trading related to public offerings of new shares. You have repeatedly expressed your intention to urge N omura Securities and other securities companies acting as lead managers to exercise the self-purification capability. Specifically what actions do you expect them to take? A. Basically, this problem boils down to the issue of corporate governance. Given that insider trading cases have repeatedly occurred, particularly at the three leading securities companies, we must assume that this has become a routine practice. Even though we recognize that the self-purification capability has been exercised to a certain degree as a result of the announcement of the results of internal investigations, we are strongly urging them to further exercise that capability under appropriate governance from the perspective of the public nature of their operations and the protection of investors.
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I still want them to do that.

Q. In relation to the previous question, the FSA has ordered 12 securities companies to review their operations by August 3. If their reports include false statements, what actions will you take? A. First of all, they will conduct the review. As we have ordered the review, we will make judgment after examining the review results. I cannot answer your question with any prejudgment. Q. May I take it that you will take strict actions if false statements are recognized? A. False statements must not be tolerated, so we will strictly examine their reports. Q. Let me ask you about insider trading. There have been many cases in which a hedge fund requested the provision of information from securities companies. The hedge fund in question is based abroad. I n the investigation of the insider trading cases, what is the status of the FSA's cooperation with foreign authorities, particularly in Singapore, H ong Kong, London, and New York? A. I would like to refrain from commenting on specific cases. Naturally, the FSA will cooperate with foreign authorities. Q. I have heard about an investigation into a hedge fund in H ong Kong. Do you have any information on that? A. I do not have any information based on which I can make comments.
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NUMBER 10
The True Sign of Intelligence

Remarks by CFTC Commissioner Scott D. OMalia, Stevens I nstitute of Technology- Hanlon Financial Systems Lab
Albert Einstein said, The true sign of intelligence is not knowledge but imagination. I like the quote very much, and it reminds me of how the Commission must approach its oversight mission going forward. I believe technology must play a larger and more foundational role in the Commission's execution of its market oversight responsibilities, risk management and in the protection of customer funds. Clearly the evolution to an almost exclusively electronic futures market over the past two decades has benefited from a massive amount of imagination in terms of the creation of new algorithmic trading strategies through the application of cutting edge technology. While the Commission doesn't need to be on the cutting edge of technological application, we must be more imaginative in developing our own technology strategy and not accept the status quo. It is a pleasure to be invited to speak at Stevens I nstitute, which not only imagined, but developed a first-class financial engineering research program and facility. I have to believe this is what Einstein was referring to when he described as the true sign of intelligence; the application of knowledge and imagination.
Prior to my nomination to the Commission, I served as the Clerk of the Senate Committee on Appropriations, Subcommittee on Energy and Water where I had responsibility for funding the Department of Energy (DoE).
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What few people realize about DoE is that it also funds research of everything from nuclear physics to the nuclear weapons program.
Simulating, solving and understanding the most challenging physics questions have and will continue to push to bounds of computing. And it was my job to fund this cutting edge technology. After the ban on underground nuclear testing, the weapons program relied heavily on computer simulation that required bigger and faster computers than what existed.
So, we invested hundreds of millions of research dollars into advanced computing and simulation.
It took real imagination to conceive of the yet-to-be developed massively parallel computing platforms that are used today. I am especially proud of the Roadrunner supercomputer, a joint effort with Los Alamos National Laboratory and I BM to create what was then the worlds fastest computer. On May 25, 2008, Roadrunner became the first computer to break and sustain the petaFLOP barrier by processing more than 1.026 quadrillion calculations per second. My Appropriations experience was invaluable and provided me with an understanding of the potential of advanced computing and I am determined to make technology the foundation of the Commissions oversight, risk management and customer protection responsibilities.
Today I would like to share with you my recommendations regarding a technology strategy for the Commission.
First, I will provide you with the current technology state of play and explain why it is important for the Commission to develop a comprehensive technology strategy that builds on appropriate concepts of knowledge management.
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Second, I will talk about how academia, the private sector, and other federal agencies must play a critical role in expanding the Commissions technological capacity in the shortest time frame, while using the most cost-effective means possible.
Finally, I would like to talk a little bit about the current issues I am working on as Chairman of the Commissions Technology Advisory Committee.
Current State of Play: the Commission Lacks a Technology Investment Strategy.

The current state of the Commissions overall investment and use of technology is unacceptable and unsustainable. Investing in technology has, to my knowledge, never been a priority. To say that we have failed to keep pace with the markets is an understatement. Our lack of focus and imagination in this critical area is a direct result of not having an investment strategy that identifies specific technology objectives tied to our surveillance and oversight mission responsibilities. Much has been said about the awesome responsibility of overseeing the swaps market in terms of manpower and computing power. Without a doubt, the Dodd-Frank Act expands our oversight responsibility to include the swaps market, which notionally represents a $650 trillion global market of which roughly $300 trillion are U.S. jurisdictional trades. This figure eclipses the notional size of futures market which stands at roughly $35 trillion. On a gross value basis, however, the total global swaps market is just $20 trillion.
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On a per trade basis, which is specifically relevant to our technology discussion because this is the level at which our software will have to engage, the two markets bear no resemblance.
CME's Globex system executes approximately 13 million trades per day, which pales in comparison to the 250 million order messages that pass across that same system on a daily basis. In contrast, only tens of thousands of swaps trade globally on a daily basis. The Commission has expressed an interest in collecting and analyzing futures order data, an idea that I support. But it remains unclear as to what the system requirements of such an endeavor will be. And this problem is further exaggerated by our failure to clearly articulate the ultimate purpose for which we will utilize the data. Before we invest in new technology, we need to specifically identify our goals and determine these systemic requirements. On several occasions, I have expressed my concerns that the Commission applies a "Ready, fire, aim" approach in developing its Dodd-Frank rule-makingswe must not make the same mistakes when developing a technology strategy. There is no doubt the Commission needs to intently focus on deploying new technology that is properly scaled to the markets it is tasked with regulating. Nevertheless, we need to develop our capabilities to collect, aggregate, store, and perform the necessary analytics to oversee and monitor the swaps, futures and options markets because it is our statutory duty to do so. The main questions are: what are our informational needs and how should we prioritize technology investment to meet these needs?
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I believe there are three basic components to the Commissions development and execution of a successful technology strategy.
The first element is to develop a needs-based strategy. The second element is to organize the Commission in a manner that effectively utilizes new technology. The third and final element is determining the financial requirements, and that includes finding creative solutions to bringing it all together.
Knowledge Management/ N eeds-based Strategy

With regard to a needs-based system, I believe that we have failed to employ concepts of knowledge management. We have a lot of data being manipulated and organized into more information. But, we are missing that last step of turning that information into comprehensive knowledge about the markets, trading strategies and behaviors, risks, weaknesses, etc. We need to be asking each office and division within the Commission: What information do you need to accomplish your duties and mission critical goals? What are your concerns? What keeps you up at night? Flash crash? Manipulation? Missing customer money? Risk Management?
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We need to understand their priorities and develop a clear strategy based on that information.
Organization: Office of Technology and Data is on the Right Path

With regard to the Commission's organizational structure, I believe we are making good progress. In 2011, I urged the Commissioners to reorganize the Commission and create an Office of Data and Technology with responsibility for the intake, organization and management of data from both the futures and swaps markets. This office joined our technology group with market oversight staff. The joined forces are now able to focus on developing automated data collection, aggregation and surveillance. Thus far, I have been impressed with this new initiative. But, I still believe we have to do more to remove the silos among other divisions to ensure their level of technology adoption is maximized and our investment priorities are well-defined. We don't have the financial luxury develop redundant systems.
Big Data Challenges

The Commission is facing a big data crisis, but I use this term big data loosely.
While our data challenges are big for the Commission, they pale in comparison to most companies many in our industry.
When I asked our staff about our storage challenges, they indicated that five terabytes of data is pushing the limits of our storage capacity.
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However, when I spoke with a hedge fund manager about their data demands, I was told this one fund collects over seven terabytes per day.
The Commission is pushing the limits on both our hardware and software capabilities. The lack of data storage and processing capacity is undermining our oversight and surveillance capabilities. Early this month, our new surveillance chief, Matthew Hunter, gave me a demonstration utilizing new visualization surveillance tools, and on several occasions the system crashed, unable to handle the computing demands.
Budgets
Since arriving at the Commission, I have argued for a greater share of our budgets to be dedicated to technology. The Commission has consistently requested additional funding for technology. However, when technology competes with new hires, technology always loses. Congress directed the Commission to provide a minimum floor for technology. In Fiscal Year 2011, Congress directed the Commission to spend not less than $37.2 million; we spent the minimum. In Fiscal Year 2012, the Commission received $55 million for technology and then immediately requested that $10 million of the funds be reprogrammed to support new hires, leaving the Commission with just $45 million.
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Congress has been very sympathetic to the Commissions technology needs pushing us to invest more in technology, only to be told No, we have other higher priorities.
I hope Congress continues to push the Commission to do more with technology and fence the money off to prevent it from being used for other purposes. Our fate for fiscal year 2013 remains unresolved, but we have requested $96 million for technology.
We based this request on a two page budget narrativewhich constitutes our technology strategy.
You cannot tell where funding for Blackberries end, and investment in new surveillance hardware begins. And that may not be the worst of our problems. Let me make on one final point about applying imagination, so that we have an intelligent financial regulatory systems. The new Office of Financial Regulation (OFR) is being established to be the aggregator of all financial data to perform a cross market analysis and research. They will use the data collected by the various prudential regulators and undertake research across markets to spot trends or concerns that aren't apparent to the front line regulators. This only works if we show a little imagination and develop a system that leverages the work of the individual agencies, rather than duplicates it. Duplication and redundancy is the default position of every other federal agencyit wastes resources we don't have and causes us to miss opportunities to solve our big data problems together.
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This office should consider adopting a role similar to the Office of Science and Technology Policy (OSTP).
Recently, OSTP coordinated a cross agency research effort on Big D ata in which six Federal departments and agencies announced more than $200 million in new commitments towards solving big data questions. A similar approach could be used by OFR. Oh, and remember I told you about Roadrunner?
Well, on Monday, DoE announced that it awarded contracts to various technology vendors to develop systems that operate at one quintillion calculations per second, or a thousand times faster than Roadrunner.
And, they are going to do that without escalating energy consumption. They refer to this type of research and develop as extreme-scale. Here at the Commission, we need to start by just getting on a scale.
Technology Investment Strategy

I believe our lack of commitment to technology stems from the fact that we dont have a specific technology strategy. I believe there is recognition of the importance of technology , but it is accompanied by an incomplete understanding of how it will be specifically applied at this point.
Leveraging Academia
Now let me turn to my second point and a new opportunity the Commission should aggressively pursue, which is to institutionalize the Commissions interaction and cooperation with academia. The bottom line is our limited interaction should be expanded.
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This could provide the critical, cost-effective expertise that the agency so desperately needs to address difficult and challenging technology, micro finance and critical data analysis problems.
Since arriving at the Commission, I have been seeking economic analysis and market structure studies on everything from the impact of changing the price of wheat storage, to the role high frequency trading has on our markets. I also re-established the Commissions Technology Advisory Committee (the TAC) along with two subcommittees comprised of folks who are known in their fields as visionaries. I have been impressed with the breadth and depth of the insight and analysis presented, and I am convinced we arent doing enough to tap these academic resources. As I noted in my opening statement, my previous experience working with the Department of Energy and the national laboratories exposed me to the opportunities to establish collaborative research with universities and other research institutions in centers of excellence that are already tackling difficult technology challenges. Whether it was on fusion energy, high performance computing, or nanotechnology, collaborative research was an essential solution to leverage investment in scientific manpower, facilities and technical expertise. I am convinced the government was able to achieve more than if it tried to solve these problems all on its own. This cooperation wasnt limited to academia, and the private sector contributed as well. To date, the Commission has applied such a model in a more limited fashion by contracting with economists in the Office of the Chief Economist.
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This symbiotic relationship benefits researchers who are provided access to market data, and the Commission, which is able to leverage this research for its own market oversight objectives.
Unfortunately, this model doesnt scale well and is not the ultimate solution for the CFTCs collaboration problems.
New Model to I nstitutionalize Academic Interaction with the CFTC

It is time we created a new model for the CFTC to draw on the vast expertise of universities, like the Stevens I nstitute. I believe there are two ways in which the Commission can formalize this relationship to support the creation of new analytical and automated surveillance tools, risk modeling and cross market analytical capabilities, just to name a few. The first option would be to develop contracting tools with universities that would enable the Commission to utilize an academic institution to research a specific question and allow the university to assemble the best and brightest to tackle the question at hand. It could draw on its own academic expertise to vet and review the research, saving the Commission from creating its own redundant academic review teams. I believe the Stevens I nstitute performs a similar role for the Department of Defense. The second option might be to establish a CFTC Academic Advisory Panel. The role of the Academic panel would be to recommend research topics, select and review competitive research awards, and help solve specific market structure questions to the Commission.
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This would be different from the Joint CFTC-SEC Advisory Committee and would have a more hands on approach to solving specific questions presented by various divisions within the Commission.
I am interested in exploring these opportunities for the Commission and how this type of collaboration might work within the confines of our bureaucracy and governing statutes. I believe this offers a scalable approach to solving specific research questions.
If we collaborate with researchers by providing access to market data on a confidential basis, in the same manner as provided today to the in-house economists, this approach can be extraordinarily cost effective and of great academic interest to universities.
I would like to work with Stevens I nstitute and others to better define and institutionalize this academic cooperation.
The Technology Advisory Committee

Now let me turn to my final topic: the agenda of the Technology Advisory Committee. We recently completed the second year of the reorganized TAC. In reflecting upon the first two-years as Chairman of the TAC, I am incredibly proud of what our crew of 24 was able to accomplish. We have covered such issues as pre-trade functionality and pre-trade credit checks, data collection standards, technological surveillance and compliance, the deployment of technology solutions in the swaps market, and most recently, algorithmic and high frequency trading. To put a finer point on what we have accomplished since bringing back the TAC in June 2010 with its 24 charter members, we have:
Held seven public meetings;

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Established the 19-member Subcommittee on Data Standardization charged with providing recommendations based on public /private solutions for creating well-accepted standards for describing, communicating, and storing data on complex financial products; Established the 23-member Subcommittee on Automated and High Frequency Trading charged with advising the Commission as to a working definition of high frequency trading ( HFT) in the context of automated trading strategies; Issued Recommendations on Pre-Trade Practices for Trading Firms, Clearing Firms and Exchanges involved in Direct Market Access; and Issued recommendations on data standardization through the use of legal entity and product identifiers. The Commission recently rechartered the Committee, and as Chairman, I intend to pursue an aggressive new agenda focused on defining high frequency trading and understanding its impact on our markets. The Subcommittee on Automated and H igh Frequency Trading members have worked very hard to develop a draft definition of high frequency trading with four parts: (1)The use of algorithms for decision making, order initiation or, among other things, execution, without human direction; (2)The employment of low latency technology including co-location services; (3)The use of high-speed connections to markets; and (4) High message rates. We discussed this proposal at length during our June meeting, and discussions are ongoing.
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In addition to defining what H FT is, additional Subcommittee working groups are also focused on:
(1)Identifying specific H FT strategies; (2)Quantifying and qualifying the economic impact of HFT strategies in the markets; and (3)Identifying the impact H FT is having on market micro structures and liquidity.
The Subcommittee's work will continue this fall culminating with final recommendations.
Concept Release on High Frequency Trading

There has been a considerable amount of discussion about a draft concept release recommending various testing and supervision requirements. I am not satisfied with the current draft. First, it fails to appropriately identify specific exchange-level supervisory tools already in place. Second, it is in direct conflict with itself over recent rulemakings under the Dodd-Frank Act. It appropriately states that we have new rules in place like external and internal business conduct rules directed at many of the issues identified as problematic. As the same time, however, it dismisses these rules as insufficient in order to justify the necessity of the concept release. At a minimum, the proposal needs to be rewritten to explain where the existing market controls and Commission rules fall short and make specific recommendations as to how these gaps can be filled.
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Development of a gap analysis could be of use, but until this proposal clearly outlines possible problems related to specific regulatory gaps it is tough to rationalize spending already limited Commission and industry time on this effort when implementation of Dodd-Frank is so demanding.
Applying Technology to Protect Customers Funds

Unfortunately, as a result of a second failure of a futures commission merchant (FCM), Peregrine Financial Group, I nc., which resulted in the reported shortfall in customer funds in excess of $200 million, I have had to call an emergency meeting of the TAC on July 26th to discuss the technology solutions to better protect customer funds. I have asked the TAC to explore an industry-led technology solution overseen by the CFTC to help prevent scandals like those seen at MF Global and now Peregrine before they occur again. In an age when I can check my bank balance on my smartphone, there is no reason that futures customers cannot go to bed every night knowing their investments are safe and where they should be. Faxing or mailing customer fund documentation on a monthly basis is not an intelligent oversight program. We must show much more imagination to develop a fully automated solution that confirms balances daily with independent verification and sends automated alerts to the Commission, banks and FCMs when balances don't reconcile. The TAC, along with academia and the private sector can help provide that imaginative spark we need to develop a more intelligent technology program at the Commission. I have covered the three areas I outlined in the beginning: the need for a strategic and specific technology plan; the importance of leveraging and institutionalizing an academic interaction with the Commission;
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and provided an update on the important work on the Technology Advisory Committee.
Before, I close, I do want to reiterate the importance of the Commission focusing its attention on developing better rules to protect customer money. While, I believe strongly that a technology solution is essential to preventing unscrupulous money managers from getting away with fraud or theft, there are other operational and rule changes that are also appropriate. While I will not go into the specifics, I did give a speech in January at New York Law School that outlined several specific short, medium and long term changes that can be made the would improve customer protection and protect the system against operational risk going forward. I stand by those proposals, and I hope that the Commission and Congress will address each and every one of them going forward. Thank you very much
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Risk Management Presentation July 30 2012

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International Association of Risk and Compliance Professionals (IARCP)

I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com

I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com

I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com

Press Conference by Tadahiro Matsushita, Minister for Financial Services

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Updated list of identified Financial Conglomerates

I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com

I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com

I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com

I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com

I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com

I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com

I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com

I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com

SAMA Governors Statement

I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com

2. Working Group on Global Liquidity Standards

3. Working Group on Enhanced Risk Coverage

4. Working Group on Enhanced Pillar 2 Reforms

Major Refinements and References

- Valuation and liquidity risk - Sound stress testing practices

I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com

I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com

I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com

LEVERAGE RATIO Guidance N otes 1. Background and Objectives

2. Reporting to SAMA on a quarterly basis effective January 2011

I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com

- Migration to Pillar 1: January 2018

3. Gross Exposures Schedule B, C and D

relating to derivatives 3.1 On-Balance Sheet

specific provisions and credit valuation adjustments

also be deducted from the measures of on-balance sheet exposures

All notional value to agree with M.1

items and Q17.5.3 for derivatives outstanding.

5. Computation of Capital Leverage Ratio

6. Reporting and Monitoring Period

September, 31 December of each year.

January 2013 and to last until end of 2017.

the first half of 2017 with a view to migrate to Pillar 1

Additional guidance will be issued in this regard in due course.

8. Bank Level Disclosure

9. Implementation as a regulatory measures

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Mario Draghi: Interview with Le Monde

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I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com

I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com

Our unequivocal preference is for Greece to remain in the euro area.

I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com

I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com

Elizabeth A Duke: Central bank cooperation in times of crisis

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Federal Reserve policies and coordination with other central banks

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I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com

I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com

shorter-maturity Treasury securities and buying longer-maturity Treasury securities.

Cooperation in areas of supervision and regulation

Latin American central banks: crisis response and challenges

I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com

I nternational Association of Risk and Compliance Professionals (I ARCP) www.risk-compliance-association.com

Preliminary international banking statistics at end-March 2012