Lucas Papademos: Eurosystem and Bank of Russia cooperation programme Introductory statement by Mr Lucas Papademos, Vice President of the European Central Bank, on the occasion of launching the Eurosystem and Bank of Russia cooperation programme on banking supervision and internal audit, Moscow, 20 March 2008. *  *  *  It is a pleasure for me to be here in Moscow today, together with my esteemed colleague First Deputy Chairman Melikyan of the Central Bank of the Russian Federation and His Excellency Ambassador Marc Franco, Head of the Delegation of the European Commission to Russia. I would first like to thank First Deputy Chairman Melikyan for his kind opening remarks and all those who have contributed to the organisation of this ceremony. I would also like to greet the representatives of the eight national central banks of the Eurosystem who accompany me here today, marking their strong institutional commitment to and support for this cooperation programme: the Deutsche Bundesbank, the Bank of Greece, the Banco de España, the Banca d’Italia, the Banque de France, De Nederlandsche Bank, the Oesterreichische Nationalbank and the Suomen Pankki-Finlands Bank. Today, we are taking a further step that advances the increasingly close cooperation between the Bank of Russia and the Eurosystem, by signing a protocol which accompanies the contract for the Eurosystem cooperation programme with the Bank of Russia that was signed by Ambassador Franco earlier today.
Over the past few months, the staff of our institutions have been in very close contact, preparing together the terms of the contract and finding appropriate solutions to a rather diverse set of challenges. I would like to ask you, Mr Chairman, to extend our warmest thanks to the staff of the Bank of Russia for their efforts to address all pertinent issues. The new three-year cooperation programme will start on 1 April and will focus on banking supervision and internal audit. In the area of banking supervision, the Eurosystem will support the Bank of Russia in its gradual implementation of the internationally accepted principles of the Basel Committee on Banking Supervision that are commonly known as the Basel II framework. The financial market turmoil that emanated from the US subprime mortgage crisis has highlighted, among other things, the importance of transparency and of sophisticated and effective risk management standards and practices in banks. The Basel II framework provides an advanced approach to capital measurement and capital standards. It represents the regulatory response to the increasingly complex and globally integrated financial markets, where credit risks are often passed from the originators of bank loans to a wide range of investors, instead of remaining on the books of the originating banks. Indeed, the Basel II framework was conceived to support banks in the implementation of advanced risk management standards with the overall aim of improving the stability and soundness of the financial system in all the economies around the world.