Secondly, incentives for deleveraging may emerge in a non-euro country remaining outside the banking union, also for circumstantial reasons of the home-country banking groups. All in all, the advantages of joining a banking union outweigh, in my opinion, the drawbacks. As a matter of fact, given the current stage of financial globalization, a similar approach would also be advisable worldwide. Of course, I am not suggesting establishing a global banking union. I only suggest increasing cross-border supervisory cooperation. This would  BIS central bankers’ speeches  7  mean new mechanisms, new techniques for sharing information, as well as harmonised approaches when dealing with banks in distress. V.  By way of conclusion  By way of conclusion, I would say that we should adjust our ways of thinking and acting to the shifting economic and financial reality, rather than force the financial system to embrace a more or less fashionable theoretical approach. Not only the current crisis, but also the troubled history of the banking system reveals that the viable solution is to find a balanced approach between the roles markets and governments have to play in order to put the economy on a smooth growth path. In this context, the financial system reform measures should aim not only at avoiding the outbreak of a new crisis in the future, but also at ensuring that the new architecture of the financial system enhances its ability to support sound economic growth. Thank you very much for your attention and, last but not least, for your patience.

This means that the members of the banking union should establish and implement a harmonized framework for banking regulation and supervision. Second, there should be a single supra-national supervisory authority in charge across the union (the main supervisory tasks will be transferred from the national to the European level). Third, there should be a single bank resolution mechanism to address potential banking crises. Fourth and finally, there should be a single deposit guarantee scheme in order to harmonise and centralise deposit insurance. IV.3. Assessing the project  Obviously, each pillar has its own pros and cons. Let me mention the most important ones. As concerns the single rulebook, the financial crisis highlighted the danger of divergent national rules. The current context justifies the adoption of a common legal framework for banking regulation. The European Banking Authority would play the central role in elaborating the rulebook. The result will be (i) less regulatory arbitrage; (ii) a reinforcement of the competitive neutrality principle: same business, same risk, same rules; and (iii) a higher level of transparency, contributing to a robust and uniform regulatory framework in the Single Market. On the other hand, there are some risks: (i) implementing the same rulebook across over 8,000 banks in 17 or more countries may not prove flexible enough; (ii) the tougher regulations currently in place at national level might be undermined in those non-euro area Member States which decide not to join the banking union. Local subsidiaries may choose to bypass the more prohibitive banking legislation by turning into branches.