sector. these became what is known as the 2 / 3 bis central bankers'speeches single rulebook – a single framework for financial institutions in all 28 eu countries. but writing the rules was not enough. so, the second step was to build european banking supervision. and so the single supervisory mechanism, or ssm for short, was created. it is made up of the ecb and the national supervisors of the 19 euro area countries. the ecb directly supervises the largest banks in the euro area. smaller banks are still supervised at the national level, but in close cooperation with the ecb. our job is to contribute to a healthy and resilient banking system. we make sure each bank respects the rules it is subject to and is supervised according to the same approach. this creates a level - playing field for all banks across the euro area and avoids supervisory arbitrage and national bias. the next step was to create a european system to deal with bank failures : the single resolution mechanism. this step represented a larger paradigm shift. banks should no longer be rescued using taxpayers ’ money. those who have reaped the benefits, that is the investors and creditors, should pay first if things go wrong. this helps to keep incentives healthy. but let ’ s go back to the institutional architecture. the single resolution board, or srb for short, is at the centre of the single resolution mechanism. the ssm and the srb cooperate closely when a bank is in trouble. the decision to declare that a bank is failing or likely to fail is made by us as supervisors. at that point, when a bank fails, the srb takes over. it decides whether a bank should be resolved at the european level, or wound up under national legislation. the details of this process are complex, and i ’ m happy to tell you more if you are interested. but the bottom line is simple. the mechanism aims to minimise both the impact of bank failures on financial stability and their cost to taxpayers. but resolution is not the final piece of the puzzle. nor is it the final pillar of the banking union. it was envisaged that the banking union would be supported by three pillars. european banking supervision and resolution are the first two. the third pillar is a european deposit insurance scheme. it is still in the making, but its importance is clear. for there to be a true banking union, depositors in all countries need to have the same level of confidence in their banks

sabine lautenschlager : europe - past, present and future speech by ms sabine lautenschlager, member of the executive board of the european central bank and vice - chair of the supervisory board of the european central bank, at a meeting with students at copenhagen university, copenhagen, 14 may 2018. * * * it ’ s always nice to visit universities. they are special places, meant for the free exchange of ideas – places where bold thinking is encouraged and the orthodoxy challenged. so today i ’ m going to step back from the technical aspects of my day - to - day work. i ’ m going to take some time to reflect instead on the big picture. i will first talk about some of the eu ’ s historical milestones. after that, i will tell you a bit about my work. and once i ’ ve finished my brief remarks, i look forward to answering your questions – and to asking you some of my own! looking back to look forward as students of economics, many of you will, i ’ m sure, have read articles and books about the future of european economic and monetary union. some of you may even have read about the new system for banking supervision and resolution – the banking union. i hope you have enjoyed learning about these topics. but i also think it ’ s important for students to look beyond technical policy debates. from time to time, it ’ s good practice to go back to the fundamental questions. things like : what has the european union achieved in the past 60 years? and what would we like it to achieve in the next 60? we insiders would also benefit from this kind of reflection. in the humdrum of meetings, papers, non - papers and briefings, i feel that we do not take enough time to reflect on the achievements of the past. nor, perhaps, do we think enough about the strategic, long - term perspective. so today i hope that, together, we can do just that. let us start by travelling back in time. let ’ s try to put ourselves in the shoes of a european citizen in 1945. whether we imagine this person living in paris, berlin, rome or copenhagen, we know they are living in a country scarred by war. now, if this person were able to see what the future would hold from 1945 to 2018, they would find it in many ways almost miraculous. for one thing, anyone over the age of 27 in 1945 had lived through two world wars. so