(ii)  The preparation of the organisational framework, which will include the practical arrangements for cooperation between the ECB and the National Authorities, within six months of the entry into force of the Single Mechanism Regulation. (iii)  The drafting of the ECB Supervisory Manual, which will address procedural and methodological matters, including the risk assessment system that the Single Mechanism will implement, on-site inspections and other processes that form an integral part of the supervisory review process. (iv)  The introduction of the Technical Standards on prudential and accounting Supervisory Reporting, which will allow a significant degree of cross-country consistency to be achieved regarding the periodic confidential reports that banks file with supervisory authorities. (v)  A comprehensive assessment of the credit institutions of the participating Member States, including a balance-sheet assessment at a given point in time. I will elaborate on this in a moment. Integrating seventeen national supervision systems (some of them made up by two authorities) along with the ECB in order to set up the Single Supervisory Mechanism is, indeed, a major challenge. The centrepiece of this integration has been the concept of Joint Supervisory Teams (JSTs), which are going to take care of the direct supervision of the significant banks. These teams will be made up of supervisors from the ECB and from the National Authorities; under the guidance of an ECB coordinator, they will be entrusted with the supervision of each of the  BIS central bankers’ speeches  3  significant banks.

The Heads of State and Government of the European Union committed to a banking union in June 2012. Since then, major steps have been taken, within a very challenging timeframe, to set the basis for common supervision, through the single supervisory mechanism and common resolution arrangements; as for harmonized rules to protect depositors, they are also on the agenda, but the progress is clearly lagging behind. Let me now address each of these three pillars of the Banking Union. Single Supervisory Mechanism Last week the European Council adopted the Regulation establishing a Single Supervisory Mechanism (or SSM). Within one year, the ECB will, together with the national supervisory authorities, assume broad supervisory competences over the whole banking sector of the Euro area and of those other EU countries which decide to opt-in. The ECB will be the central player within this new mechanism. Those credit institutions deemed to be significant according to the criteria laid down in the Regulation will be directly supervised by the ECB with the assistance of the national supervisory authorities, while the rest of the system will be indirectly supervised by the ECB through the national supervisors. In numbers, out of approximately 6,000 credit institutions in the Eurozone, the ECB will directly supervise around 130 banks, covering around 85% of total banking assets. The single mechanism will be based on the idea of centralised supervision, offering a common view for the supervision of the whole sector, while building on the knowledge and expertise which exist at national level.