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Papademos outlined the key requirements to establish a Systemic Risk Council calling for a solid legal basis. Close co-operation and well-functioning
Also, adequate institutional mechanisms need to be in place to ensure that the risk warnings and the related recommendations issued by the Systemic Risk Council are translated into effective action.
The actions of policy makers and market participants should not only aim at overcoming the current difficulties, but should also consider the strategy and measures that will ensure sustained prosperity and that crises such as the current one will not occur again, ECB Vice-President Lucas Papademos said.
It is essential that the revealed weaknesses in the functioning of the financial system and the inadequacies of the regulatory and supervisory framework are effectively and promptly addressed, he said. In particular, there is a growing consensus among policy-makers about the need to strengthen and broaden the regulatory framework and to develop macro-prudential supervision globally and in the European Union.