It will help to avoid redundant and unco-ordinated approval and validation work, thereby reducing the implementation burden on banks, and conserving supervisory resources. In this regard, the Committee’s Accord Implementation Group continues to encourage practical work among supervisors on applying Basel II effectively and efficiently to internationally active banking organisations. The AIG is currently working with supervisors of different areas of the world to conduct a number of “real case” studies to gain better insight into the practicalities of co-operation between home and host supervisors. In this context, if you will permit me, I would like to speak from my perspective as a European banking supervisor, and pick up on the statement I made at the beginning of my intervention. As I said, I believe that Europe is in a unique position to lead the way in the cross-border implementation of the  BIS Review 3/2005  3  new framework and to make faster and more tangible progress than is currently possible on a wider international basis. I think we need to seize this opportunity with both hands, because it will not just benefit us in the EU, contributing to the fulfilment of the Lisbon objectives, but, I believe, will also have a positive impact beyond our borders. We have two major advantages in this respect. Firstly, the division of supervisory responsibilities between our countries is embedded in our common single market legislation in the banking field, founded on harmonisation and mutual recognition.
Looking forward, we continue to expect inflation rates in the euro area to be in line with price stability over the policy-relevant medium-term horizon, thereby supporting the purchasing power of incomes and savings. After today’s decision we consider risks to price stability over the medium term to be broadly balanced. This takes into account the latest economic data releases and survey information, which add clear further evidence to the assessment that the euro area is experiencing a significant slowdown, largely related to the effects of the intensification and broadening of the financial turmoil. Both global demand and euro area demand are likely to be dampened for a protracted period. Monetary expansion is moderating further, supporting the assessment that inflationary pressures and risks are diminishing. All in all, the level of uncertainty remains exceptionally high. The Governing Council will continue to keep inflation expectations firmly anchored in line with its medium-term objective of inflation rates below, but close to, 2%. This supports sustainable growth and employment and contributes to financial stability. Accordingly, we will continue to monitor very closely all developments over the period ahead. Allow me to explain our assessment in greater detail, starting with the economic analysis. Since September 2008 the financial market turmoil has intensified and broadened. Tensions have increasingly spilled over from the financial sector into the real economy. As a result, economic activity throughout the world, including in the euro area, has weakened further.