european supervisory regime needs a sounds institutional framework. in this context, thought must also be given to the ssm ’ s decision - making structures and processes. now that the ecb is responsible for banking supervision, the ecb governing council is the supreme decision - making body for supervisory decisions in addition to monetary policy ones. these two decision - making powers are relevant in that banks are, on the one hand, an essential part of the monetary policy transmission mechanism but, on the other hand, are also subject to the scrutiny of the banking supervisor. it would be wrong to claim that conflicts of interest could never arise here. of course, these potential conflicts of interest were discussed back when the ssm was established, and the institutional framework that restricts the role of the ecb governing council in supervisory decisions is meant to address this. this framework has worked thus far, but i am not sure whether it will work in all circumstances. it therefore can ’ t do any harm to think of ways to improve it. bis central bankers ’ speeches alongside the institutional structures, i also see further need for improvement with regard to the decision - making structures and processes. specifically, i mean that the ssm ’ s senior management levels must – due to requirements laid down in the ecb statute – also deal with many routine tasks which, purely in terms of their content, could also be carried out at other levels of the organisation. the “ fit and proper ” assessments of future members of the supervised banks ’ management bodies with executive and supervisory functions are an apt example here. this year alone, the supervisory board, followed by the governing council, has made more than 1, 000 such fit and proper decisions. the ecb recognises these problems and is currently working on a solution that will hopefully soon be found. 4. conclusion a european supervisor for the largest banks in the euro area has now been in place for one year. from my perspective, this first year has been satisfactory and shown great promise. nevertheless, we still have some way to go before a genuine european supervisory regime is established. we will only reach this destination if, when harmonising supervisory standards and supervisory options, we strike a balance that makes sense from a supervisory and economic perspective and fits the structures and circumstances of the european banking market. this challenge can certainly be overcome, and it is with this in mind that i look forward to the ssm ’ s second year. thank you for your attention. bis central bankers ’ speeches

long - run inflation expectations have been well anchored. monetary policy has thus delivered its necessary contribution to a stable macroeconomic environment supporting the implementation of structural reforms. perhaps less well - known but also important is the ecb ’ s and the escb ’ s contribution to a stable macroeconomic environment by promoting financial stability. this task is crucial as a well - developed and stable financial system improves the efficiency of financing decisions, favours a better allocation of investment in and among economies and thus supports economic growth. this was also recognised by the lisbon council when it called for accelerating the completion of the internal market for financial services and to “ exploit the potential of the euro ” in achieving this aim. the tasks of the escb in this regard consist of systematically monitoring financial stability conditions in eu and euro area countries. this monitoring particularly aims at identifying potential sources of vulnerability in the financial system of the euro area and the eu and to assess its resilience to shocks. to sum up, maintaining price stability is a vital contribution to fostering non - inflationary sustainable growth and, together with financial stability, supports a stable macroeconomic environment, within which structural reforms can fully exploit their welfare enhancing effects. maintaining price stability and promoting financial stability is thus the assistance monetary policy can render to the lisbon agenda ’ s reform efforts. 5. global aspects increasing the euro area ’ s insufficient growth potential and its ability to adjust more flexibly to changes in economic variables becomes particularly important against the background of globalisation. this is even more the case as over the last years the international trade in goods, capital and services has witnessed imbalances. these imbalances are signalled by, for example, the persistent us current account deficit, which amounts to around 5 % of gdp. this is connected with an increase in us net liabilities vis - a - vis the rest of the world from 5 % in the early 1990s to roughly 23 % of gdp at the end of 2002. these imbalances will finally have to be corrected. an adjustment can, however, be brought about in several ways : first, the deficit country ’ s growth rate could decline relative to growth rates in the rest of the world. this would, among others, reduce this country ’ s demand for foreign goods and services, potentially hampering real growth because of reduced exports elsewhere in the world. second, the global imbalance could be diminished by an acceleration of growth in the rest of the world as this would lead to an increased demand for the