both to firm - specific and systemic risk. similarly, it is essential that regulatory authorities and central banks have sufficient oversight of the operation of financial markets and financial market infrastructures in order to be able to monitor and interpret market shocks and adequately evaluate the desirability of any intervention policies during periods of market distress. accordingly, an important criterion in assessing the stability of a reconfigured european financial system will be the implications for crisis prevention and crisis management policies. in parallel, it is also essential that there are credible recovery and resolution plans for newly - reconfigured financial entities. as financial firms work out strategies to manage the implication of brexit, it is important for the policy community to ensure that regulatory arbitrage does not play a material role. this applies in relation to locational choices and also in relation to options in terms of organisational structures. in relation to the former consideration, the role of the single supervisory mechanism in bank 1 / 3 bis central bankers'speeches supervision ensures that a level playing field will apply in relation to banks. although there is more national autonomy in relation to other types of financial intermediaries and market infrastructures, national regulators operate within the broad framework of the european system of financial supervision and there is significant ( if incomplete ) convergence in supervisory approaches across member states. with a broadly - similar regulatory framework across member states within the eu, the primary focus of firms in relation to brexit planning should be on non - regulatory geographical criteria such as the existence of local clusters of financial expertise, legal systems, the availability of a skilled workforce, the quality of relevant infrastructure, cost factors and related considerations. in relation to the latter consideration, it is worth highlighting the points made by ecb executive board member and vice - chair of the supervisory board of the ssm sabine lautenschlager in some recent speeches. 1 in particular, she noted that the banks under ssm supervision will be closely monitored in relation to the risks that result from different group structures and from relations between different entities of the same group. she also raised the possibility that eu regulations might need to be adapted so that the largest investment firms are supervised in the same way as banks. in addition, she underlined the importance of sufficient local staff, sufficient local risk management and operational independence. finally, it is essential that the resolvability of the euro area entity is demonstrable. taken together, these points suggest that the european regulatory system will suitably evolve in

, many of the remaining firms are in a weakened financial condition, and may need balance sheet as well as organisational restructuring in order to survive and prosper. recent research 1 at the central bank has confirmed that stressed balance sheets are clear early warning signs of subsequent loan default. but the research also indicates that some well - run firms can ride these problems out, notably if they are being run by an experienced owner that has been with the firm through other ups and downs. many balance sheets are stressed because of unwise property investments made on the side of a viable non - property business. restructuring these balance sheets without losing the true value of the resources, human, technological and physical, that are now engaged in each firm ’ s core business, is a key challenge for corporate restructuring in ireland today. overall, this is a challenge that will absorb the efforts of banks, law firms, and – that most elusive of professions, well - represented here today – workout specialists. cf. fergal mccann and tara mcindoe - calder. “ determinants of sme loan default : the importance of borrower - level heterogeneity, ” central bank of ireland research technical paper 6rt12, september 2012. bis central bankers ’ speeches the modern economy is driven by firms : they generate the bulk of employment, and the output that supports the wages and salaries, as well as feeding directly and indirectly into the tax revenue needed to support the social and economic infrastructure that underpins all of economic activity. healthy firms are a prerequisite for a growing economy that creates jobs. too many of even the surviving irish firms have not yet recovered from the crash and need restructuring. corporate failures in the last big downturn in ireland restructuring of distressed companies is not a new phenomenon in ireland or anywhere else. reflecting on ireland ’ s experience with corporate financial distress over the years, many resonant names come to mind. companies fail in good times as well as bad times, but it is the downturns that see the vast bulk of corporate restructuring business. the last big downturn in ireland was in the 1980s. and i well remember some of the big names that got into trouble in those days and were either helped or not helped by the government of the day. take irish shipping, for example, which got caught up in over - ambitious expansion and over - indebtedness as it built a large fleet of leased vessels well beyond that company ’ s traditional goal, which aimed at controlling sufficient