to the agency problems of equity financing. 8 this highlights the risk of a “ race to the bottom ” towards a liability structure that would leave bank managers unchecked. it is therefore crucial that all sources of bank financing are subject to adequate monitoring. the economic literature clearly points out that exposure to credit risk should be left primarily to those actors who have the best information on counterparty risk, namely, shareholders and debt - holders, hence the new capital requirements and the bail - in rules. let me note however that inducing greater monitoring efforts is a necessary, but not a sufficient condition to mitigate excessive risk - taking. bank debt - holders have to be able to monitor banks ( market monitoring ), but by monitoring them and pricing risk correctly they are also effectively influencing banks ’ behaviour ( market influence ). making market discipline work calls for a more comprehensive regulatory and supervisory framework of which bail - in rules are only a part, even if a significant one. and since bail - in rules have confirmed that insured depositors are protected by deposit guarantee schemes, i. e. ultimately by the taxpayer, the banking supervisor can be represented as the public authority to whom insured depositors delegate the monitoring of bank behaviour. all in all, while a good resolution framework is needed, it can only be a complement, and not a substitute for market discipline and supervisory vigilance. what does the empirical evidence of the effect of bail - in on funding costs say so far? the evidence points to a possible increase in the cost of funding for senior unsecured debt. for instance, a recent survey9 suggests that under a bail - in regime investors would demand around 90 basis points more for a senior bond issued by a single “ a ” bank. the investors surveyed also expect that the implementation of a bail - in framework will lead to an increase in price differentials across issuers with diverse credit quality. however, all this has to be weighed against the offsetting considerations that i just described. indeed, econometric results undertaken at the ecb for a sample of european banks suggest that the announcement of the directive had so far limited impact on the cost of senior unsecured debt. but for the financial sector, there are still two sources of uncertainty with see m. dewatripont and x. freixas ( 2012 ), “ bank resolution : lessons from the crisis ” in m. dewatripont and x. freixas ( eds. ), the crisis aftermath

not to only to the most vulnerable banks, but to the whole financial system. ultimately, this would increase the risk for the central bank ’ s balance sheet rather than protecting it. hence, in order to enable that a wide range of the counterparties could continue participating in the refinancing operations, the eurosystem temporarily relaxed some of the eligibility criteria for underlying assets. this was done on several occasions. for instance, from 2008 to 2011 and again as of 2012, we accepted foreign denominated marketable assets. in 2012 we created the additional credit claims framework. credit standards have been changed by accepting lower rated assets compared to those accepted at the beginning, notably for abs that fulfill certain criteria. however, these accommodative measures were coupled with a stronger - scrutinised counterparty framework and with more stringent risk control measures. as a result, the total amount of eligible collateral increased. thus, an enhanced participation of counterparties in the refinancing operations was enabled, while at the same time the risks for the eurosystem expanded only moderately. bis central bankers ’ speeches the eurosystem collateral framework has been quite complex from the very beginning, not the least because of the variety of national frameworks preceding it. with the onset of the monetary union, the goal was to provide access to eurosystem credit operations to a broad range of counterparties, in contrast to some other central banks which rely on a few counterparties. therefore, the collateral framework had to take into account the various national banking systems and financial markets. some national central banks, for example, accepted credit claims as collateral, while others did not. some countries had developed covered bond markets, while others only started to set up a respective covered bonds law later, and the same could be said for abs. for a collateral framework, a common standard had to be found which embraces these national characteristics, while at the same time ensuring that sufficient collateral is available. several of the measures taken in the crisis have added to this complexity. therefore a challenge going forward is to make the collateral framework simpler and more transparent, without impacting the ability of counterparties to access our refinancing operations. i am confident that we will achieve this. conclusion ladies and gentlemen, 2014 has been a year of profound change. but what has been achieved so far is not enough. 2015 needs to be the year when all actors in the euro area, governments and european institutions alike, will deploy a