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European and national authorities should launch a comprehensive strategy that combines a range of suitable tools to deal effectively with Europe’s NPL problems. A key aspect of that strategy will be aligning incentives between the parties involved: banks, investors and the authorities. A number of tools look particularly promising. National asset management companies (AMCs), if designed correctly, have been successful in relieving banks’ NPL burdens and recovering asset value. A blueprint for national AMCs in the euro area – essentially, a manual for setting up an AMC – would save authorities time and money. In addition to clarifying in detail how AMCs can be made compatible with the EU legal framework, such a blueprint should identify international best practices for key aspects of AMCs such as eligible asset classes, participation requirements, 1/2  BIS central bankers' speeches  asset valuation, capital and funding structures and governance. Apart from AMCs, securitisation schemes also have the potential to kick-start the NPL secondary market, but may require public intervention to signal that governments are determined to follow through with structural reforms that will improve asset valuations. NPL trading platforms or clearing houses should also be fully explored, even at euro area level, to increase NPL transparency and stimulate transaction activity. To be successful, however, all of these options require a considerable push for structural reforms related to debt enforcement and a reduction of information asymmetries. If these measures become credible, investors will recognise the shift in policy and should ultimately be willing to pay higher prices for NPLs.