I should mention that the ASC, with its composition of distinguished academics with different expertise, and in a sense more independent views, has been a catalyst in some of the work I  |3  just mentioned. Some of the topics on which the ESRB has produced and published valuable contributions include, for instance, the regulatory treatment of sovereign exposures; macroprudential assessments of various issues related to shadow banks, an area where there is still a lot of new ground to cover; the insurance sector; and commercial and residential real estate markets in the EU, to name just a few. I am also thinking of the work on structural issues regarding the banking sector, for instance in a report called “Is Europe overbanked?” by the ASC. This is a very relevant question in my view, and one that we will most likely get back to in the first panel today, where the ECB Vice President will lead the panel discussion addressing the effects of the low interest rate environment. The latter is another topic which benefits from being assessed from a macroprudential viewpoint, and which is naturally also on the ESRB’s agenda. The regular identification and monitoring of potential systemic risks also benefits from the ESRB’s broad composition I would like to mention another core task for the ESRB, namely identifying potential risks to the EU financial system at an early stage and, as mentioned, issuing warnings or recommendations about policy actions to mitigate such risks when deemed appropriate.
As we move forward, we may need to strengthen that flexibility even further. We do not have perfect foresight as regards what risks we will have to tackle further down the road. Nor do I think that we will ever develop the perfect tool for every conceivable financial stability risk out there. One thing to bear in mind in all this, is that whether the perspective is global, regional or national, it all boils down to the same thing - safeguarding the stability of the financial system. And in today’s highly interconnected world, it is quite obvious that we to some extent are all in this together. This brings me to a related issue where the ESRB has played a leading role. Reciprocation of macroprudential measures – key for their effective implementation An important prerequisite for effective implementation of macroprudential policy in a financially highly integrated world is that the measures in question can affect all financial actors which influence the specific risk that authorities are trying to mitigate. This is not always the case. For example, foreign branches are regulated by authorities in the home country of the parent company, and may not be affected by measures taken in the country where they are active. Reciprocation may in such a situation help mitigate the risks, minimize potential regulatory arbitrage and also provide a level playing field.