 First of all, I would like to thank you for your kind invitation. It is really an honor for me to talk to such a distinguished audience. And I think the format will allow some real discussions given that it's a small room and we are in a more intimate setting than in a large conference room. What I will try to do is to have a short introduction of how the establishment of the European financial supervisors and among them the European Banking Authority came about. And I would like to put that into a European context into the process of addressing the problems that came about in the European financial system during the 2007 and 2009 financial crisis. And unfortunately to the context of recent events that are still prevailing in the financial markets in Europe. I think that the advantages of financial integration in the European Union and even more so in the monetary union of Europe has been well documented. The literature in academia and also in applied research clearly stated that there are many advantages of creating a single market in Europe in financial services. I would name three advantages that is I think applicable to all countries and all financial institutions. One was that cross-border activity increased the international diversification of credit risk in the asset books of banks. And if well managed in terms of risks it is clearly an advantage for an institution to have a well diversified asset portfolio. Also on the liability side the integration increased the opportunity for banks to go in their funding activities to a more diversified setting and therefore stabilizing their funding structure. And thirdly there was as a consequence of this integration there was a clear process of transferring knowledge, expertise, governance and stability across the borders through subsidiaries and branches across the European market. Nevertheless I think this process had its own risks and these risks were revealed in the financial crisis and I would mention a few of these risks. When the crisis came about it became very apparent that there was a problem of the regulatory landscape in Europe. Financial institutions who were acting in a global fashion or in a European fashion in a cross-border fashion were regulated extremely differently in various markets. And unfortunately this was used for regulatory arbitrage purposes and this meant that some of their activities were not properly regulated and were not properly overseen by the financial regulators of their respective jurisdictions. Other problems that came about in the financial crisis was that due to their international diversification their activities became completely interconnected so if there was a problem emerging in one spot or in one institution or in one country or in one segment of the market that translated into waves of risks very quickly to the entire European financial sector. Now this of course came brought the recognition that something needs to be done at the European level if we want to preserve the advantages of integration but we want to reduce the risks associated with this integration. This brought about the setup of the new European financial supervisory framework. I will try to... This has to be the middle part of it. The middle, okay. Okay, so what I will talk about is a little bit of an introduction of the landscape of the supervisory architecture in Europe. Then I will go into the details of the functioning of the perceived or potential functioning of this new supervisory infrastructure and then I will mention some topics of let's say particular interest in our activities of recent month. The new institutional arrangements in Europe are based on let's say two major pillars and four institutions altogether. One pillar is that a new authority was created for macroprudential oversight of the European financial system. This is the ESRB. It is dominated by central banks. Its seat is with the ECB. Its chairman is the governor or the president of the ECB and it is functioning there to look at the European financial system as a whole and try to identify risks that are threatening the entire functioning of the European financial system. The other pillar is the, let's put it this way, the microprudential pillar of the architecture and this is comprising three institutions, three microprudential authorities that have been created with a sectoral breakdown for the insurance and pension sector, for the banking sector and for the securities market sector at a European level. These institutions, the insurance is seated in Frankfurt, the market, the security supervisor is seated in Paris and the EBA is seated in London. These institutions are there to provide functions of microprudential nature for the European banking, insurance and securities markets. There is a joint committee that is coordinating between the three ISAs. They are called the European Supervisory Agencies, the ISAs and this joint committee is chaired on a rotational basis and it's meeting every quarter. So this is the new institutional framework. These new agencies have been recently set up, they started operations from 1st of January this year only and they are relatively small organizations in terms of size just to give you an idea and then you can compare it or relate it to the national supervisors of various countries. The EBA when I started my job there in April was about a team of 30 people and now we have grown to 50 which is in percentage terms it's a huge growth but in terms of manpower it's still a very, very small organization and I will explain how we are going to grow further and how we are going to perform what we are supposed to do. Okay, what are the objectives of setting up the European, I will talk about the European Banking Authority but similar lines are true for the other two. What are the major objectives of setting up this new agency? The first one and I would say this is probably the most important and the most obvious one is to change the old fashion of European Banking Regulation from having European directives and then these directives being transposed into national legislations by the national law makers subject to interpretations, subject to discretions, subject to variations in terms of the approach of transposition that resulted into major differences and major regulatory arbitrage opportunities and major under regulation in the pre-crisis era. So we will be there to ensure that the rules in Europe provide a level playing field and there are single applicable rules throughout the European banking community, throughout the European financial markets for banks. We are talking about regulations to approximately 8,000 financial institutions in Europe altogether. So it is a difficult job to create single rules for all of them irrespective of their size and type of their business model. The second major objective is to harmonize supervision. The other problem in the European financial market which became very evident in the crisis was that not only rules were different, but the enforcement of these rules, the application of these rules were very, very different and they are still very different. Countries in different parts of Europe had a completely different approach of policing or supervising their banks and their financial institutions. You all remember the light touch approach, the principle based approach, heavy onsite approach, different frequency of onsite visits, different ways of looking at banks, different resources, level of resources in various national supervisors that were completely making it impossible to have the same approach in enforcing the regulation. So there will be an objective of the European banking authority to ensure that from now on, the consistency of supervision and enforcement will be higher. There will be a specific objective of the existence of the EBA is to look at larger cross-border banks and to ensure that they are better supervised and their supervision is much stronger than before. We will have a role in risk assessment in continuous monitoring of risk and risk assessment in a bottom-up fashion, so it is very important as opposed to the ESRB's top-down macroprudential approach. We will do bottom-up monitoring of the major European players and try to assess their risks and give signals and warnings and propose action in case we do see something popping up in the various financial institutions and in various financial markets in Europe. The EBA will have a role in early intervention and bank resolution or crisis management in general. As we all know, there is an upcoming proposal of the European Commission in this area. It is not yet published, it's not yet out, so we don't quite yet know what exactly the role EBA is going to play under this new framework, but it is very clear that there needs to be something at the European level to allow authorities to manage institutions in crisis at a European level in case there are institutions operating at the European level. The EBA does also have a relatively modest role in consumer protection, and the reason I'm saying relatively modest is because of resources. We have to be realistic of what we can achieve in consumer protection at the European level with the resources we have. We do have a mandate, and we will look at issues that are in significance European, and we will try to do something good in consumer protection. It was a last minute addition to the legislation on the EBA. Main objectives, I will talk about that. The main objectives will be that we will develop binding technical standards based on the higher level legislation issued by the European Union. So whenever CRD4 is going to be adopted, we will be obliged to write pieces of legislation that are called binding technical standards or implementing technical standards that will be, and this is important, these pieces of legislation will be applicable directly to all countries in Europe. So whatever comes out of the EBA's drafting table endorsed by the Commission will be directly applicable European regulations in the European Union. Of course, if you have questions on how this is going to happen, I will be able to give you the process and the details. Of course, this will involve national supervisors to a great extent. Just to give you a magnitude and idea, we are estimating that we would be issuing about 150 pieces of regulations in the next two and a half years only on banking, which will become enforceable and observable by European financial institutions. Now, just logistically imagine that with the team of our size without the involvement of the expertise and resources of national supervisors, it would be impossible. So therefore, there is a structure in place which will make the involvement of national supervisors very, very strong. We will have to, we have got tools to promote the supervisory culture across the European landscape. We have got a very strong role in monitoring and taking part in colleges, in international banks, colleges. We do European wide risk assessment. One example of that was the stress test, but we will do continuous risk monitoring and assessment of risks on an ongoing basis. The European stress test, I think it's a well-publicized exercise. It was involving Irish banks as well, and it was well-published in Ireland. So I don't want to go into details in this introductory mark. We will have a role of reacting to risk warnings that are coming from the ESRB. So if the ESRB provides some sort of a warning that has got implications on the microprudential supervision of individual institutions, then we will follow up on these warnings, and we will contact national authorities and take the necessary steps to address these warnings. We will have powers to handle emergency situations. I must say that this is untested water. We have not done that. We have not had an emergency situation declared yet, but we have got, I mean, we might have at some point in time. That was a long discussion on what an emergency situation is. The conclusion in the regulation is that such an emergency situation needs to be declared by the European Council. So its heads of states will declare an emergency situation under which we would have increased powers to act, even on individual institutions, which we normally don't have. In consumer protection, we will have a role to monitor developments in the markets, identify trends that can be risky from a consumer perspective, and in extreme situations again, we even have the power to stop the distribution of certain products in the European market. But that's an extreme situation. I must say that we have already had the first question coming from the political side of what the first candidate of a product is that we want to stop being distributed in Europe. And unfortunately, we don't have that yet. So it will take time until we reach that stage in our operations. I've got a few slides. And of course, I will leave this with you later on. But that was the most important, I think that was the most important slide. I think I've explained the single rulebook concept, which is a marked change from the old way of regulating financial sector in Europe. Only for Basel, three implementation we are expecting to issue more than 40 standards. Very, very soon we are trying to gear up for this. The process of creating these standards will be such that under the EBA's umbrella, there will be working groups for each and every technical standards involving the experts from the EBA and involving the experts of national authorities, which in Iran's case, it's the Central Bank of Ireland. And these working groups will be doing the drafting. And then this drafting will go to an approval process within the EBA. As you know, the main governing body of the EBA is the Board of Supervisors, which is a 27-member body comprising the heads of banking supervision in the 27-member countries. So there will be member state control on what is being approved and adopted. And then once it's finalized, it goes to public consultation and impact assessment, which will all be transparent and public. And finally, when the final draft is ready, then the European Commission is supposed to endorse it under its delegated powers. And once it's endorsed, it will become directly applicable to the European market. So it's a very heavy process. And we have to do it for every single regulation, which will be issued under this process. I mentioned the oversight function of the EBA. We have touched upon all these elements. We will go to colleges. We will do continuous risk assessment. We will develop risk dashboards, which will be communicated to the national authorities. And occasionally, we will do stress testing. I do get the question very frequently from the media how often we do the stress test. It is not in our regulation. It is not defined in our regulation. It just says we are supposed to do regular stress testing exercises. And there is no decision on the next one yet. But it is reasonable to expect that we will do one probably every year. Again, it's not written. It's not carved in stone. One area I want to touch upon is the colleges. The experience we had under the predecessor organization under SEPs, which was a member organization of national supervisors, was when SEPs sent visitors or observers to the colleges of international banks, was that the quality and the way of operation of these colleges were quite different. So not only rules were different, but the way international banks were supervised were different. I can also say that what we experienced in the crisis that colleges that are the forum for supervising internationally active banks, they had a very smooth operation when business was put. But when crisis came, their functioning worsened. Their quality of functioning was going down. And the reason was because there was the confidence between national supervisors in sharing information and sharing decisions and sharing risk assessments across groups that were operating across the borders collapsed when the crisis came. So I could say that there is a lot to do with respect to colleges of supervisors to ensure that the way they function, the way they perform their duty of looking at international banks with the involvement of many national supervisors in some cases, should be standardized and protocols should be established and these protocols should be maintained even in the case of a crisis. And there should be a discussion between the supervisors on the risks and the business of the respective financial institutions. We did experience similar differences in the course of the stress test of this year, for example, when we looked at how home country supervisors communicated the stress test results to the host country supervisors in the colleges prior to publication. We did see some very good examples where full information sharing was in place and we did see some, let's say less encouraging examples where information was not that readily shared with the community of supervisors involved in the supervision of one or two particular groups. So where we want to go a lot deeper is to ensure that the way this is happening is more harmonized, is more standardized and the appropriate protocols are developed and they are respected. We of course have to stress that according to the current rules, according to the current legislation, the supervision of individual financial institutions remained with the national authorities. So the EBA is not conducting direct supervision of individual financial institutions at this stage but we have a mandate to ensure that the way these individual institutions are supervised on an international basis is harmonized and it's uniform and we will do that through the colleges. And it's given that there are more than 100 colleges in Europe, you can imagine what sort of task we have only to send one person to every college meeting to every single college. That's already something of a resource-intensive job. I will not go into the details. I think of the continuous risk assessment, there is a little bit of a technical description on the slides of how this is done. With respect to the EU wide stress test of banks, as I mentioned, this was the first time we conducted the stress test exercise under the new EBA logo. The stress test in the prior year in 2010 was a different exercise, it was done under SEPs without SEPs having regulatory powers. We, at the moment, we are in the process of doing the lessons learned exercise within the EBA with the involvement of the supervisors who participated in the exercise. And of course we will propose improvements for next year, although we clearly see that this year's exercise was clearly much improved compared to 2010 and the market perception and reception of the exercise was much more positive. So I think we have made a major step ahead and we will try to make another step next time we do the exercise. In terms of consumer protection, we have a mandate to monitor market developments. So if, for example, let's just make one example which is now very highly publicized, there is this case of PPI insurance misselling related to mortgage loans in a number of countries. We, if something like that happened today at a European level in a multiple of countries, we would be supposed to spot that and give a warning in advance and not go into a situation when such misselling has to be rectified years after it happened. So we would need to look at market trends. Unfortunately, right now we have very little capacity to do so, so we rely on national authorities, but we will need to build up some capacities to do this. We are also cooperating in this respect with the other two agencies. For example, one obvious case for monitoring is the package retail investment products which are sold under structured deposit label, are sold under different funds label and are also sold under different life insurance policies label, but essentially they are the same products, the same risk and they are sold under different labels in different sectors and there are consumer that could be consumer issues in there, so we are doing some cooperation in this respect with the other two agencies. Again, caveat is resources on this. We are also mandated to develop disclosure rules for retail investors. Some countries are more advanced, some other countries are less advanced in this. Some countries have had bad experience in the sale process of various financial products because of under information or misinformation of especially retail clients. Some countries have already progressed very well on rectifying these, so I think with the involvement of the EBA we will be able to build on the experience of various countries and to reach something of a higher level at the European level. Again, we do have the power to constrain the distribution of products under extreme scenarios. Of course for that we will need to earn the reputation of an institution that has got the authority to pinpoint, identify such a product and then make the move and restrict the distribution. And even if we do restrict the distribution of certain products that is subject to regular reviews and we cannot just maintain or abuse this power indefinitely without proper justification. Individual complaints handling remains with national authorities. This is a difficult area. We have started receiving individual complaints. What is interesting is not only from the European Union but also outside of the European Union, even outside of Europe. People write to us in emails complaining about their mistreatment in financial services. And that of course given that we are a very transparent organization and my personal email is on the website it is sometimes a difficult job because as an EU institution of course we have to reply to inquiries that come in and we sometimes find it very difficult to cope with that in terms of the numbers. So again we stress that individual complaints are still to be dealt with primarily with the national authorities. The one area where we do have jurisdiction and mandate to act is when there is a suspicion or there is a case of breaching of EU law in financial sector regulation. That in itself is a difficult call because when a complaint comes in just to make a judgment whether it has got an element of breach of EU law is a legal challenge altogether. So it's not without difficulties even these days. This is roughly what the EBA's mandate is. Again rulemaking, oversight and consumer protection the three pillars of our activities. I would say I would summarize that the role of the EBA in rulemaking is very clear. It's very clearly defined. It's very straightforward. The role in oversight is I would say given that we rely on the individual supervision of institutions by national authorities it's less centralized in a European context and in terms of consumer protection we given the resource intensity of this activity we will be able to do relatively I say relatively little in the coming few years in this area nevertheless we have to take steps there.