similar ( low ) level of risk has since proven to be a gross misperception. the effects of the us subprime crisis meant, that for a period, a general crisis of confidence spread among financial market participants. this crisis of confidence also restricted the distribution of liquidity on the interbank money market, and still continues to do so. in a nutshell : new and complex instruments to transfer credit risks in combination with large banks engaging in an “ originate and distribute ” business model have amplified the consequences of the undeniable credit excesses in the us mortgage market. these new instruments exhibited several weaknesses that seriously hampered the efficient flow of information between originators and investors. in the end, the new instruments of credit risk transfer “ distributed fear instead of risks ” ( borio 2008 ). already stated by walter bagehot in his classical treatment “ lombard street ” in 1873, " credit means that a certain confidence is given, and a certain trust reposed ”. thus, it was not surprising that, in the end, the turbulences on a special segment of the us mortgage market had the power to develop into a general turmoil on credit markets and into a crisis of confidence between the still most important intermediaries on current financial markets, i. e. banks. a lot of effort by national and international institutions is currently put into the identification of lessons learnt and necessary reforms. in an international context, most notably, the analysis and reform proposals by the financial stability forum deserve close attention. they are an important step forward to make the international financial system more resilient. most of the reform proposals focuses on supervisory, accounting, and risk management issues. this focus is certainly justified, but as it is somewhat separated form the core business of central banks, i do not want to elaborate on them in greater detail. in my following remarks i will try to sketch out in somewhat more detail issues that are more central to monetary policy. in doing so, i will try not only to focus on the recent developments, but also stress some more general aspects of the issues involved. to be more concrete, i will discuss eurosystem liquidity operations in the face of tensions on interbank markets. here i will for comparative reasons also refer to the latest steps by the bank of england. finally, i would like to elaborate somewhat on the more general implications of financial market developments on the monetary transmission mechanism to make clear that it is not only in times of stress when financial markets are of interest or

dimitar radev : bank supervision and resolution within the single supervisory mechanism and the single resolution mechanism publication by mr dimitar radev, governor of the bulgarian national bank, in the quarterly bulletin of the association of banks in bulgaria, issue 62, october 2020. * * * as of 1 october 2020, bulgaria joined the single supervisory mechanism ( ssm ) by establishing close cooperation between the bulgarian national bank ( bnb ) and the european central bank ( ecb ). the accession to the ssm comes as a result of decision ( еu ) 2020 / 1015, made by the ecb on 24 june 2020. with its accession to the ssm, bulgaria also joined the single resolution mechanism ( srm ). the ssm and the srm are the two currently operating blocks of the so - called banking union in the euro area. accession to the banking union was a precondition for the inclusion of the bulgarian lev into the exchange rate mechanism ( erm ii ). 1. participation in the single supervisory mechanism the ssm is the name of the banking supervision system in the euro area. it comprises the ecb and the national supervisory authorities of participating member states. applicable to member states outside the euro area is the so - called regime of close cooperation between the relevant national supervisory authority and the ecb – the mechanism established for bulgaria. the main objectives of the ssm are to ensure the safety and soundness of the european banking system, to enhance financial integration and implementation of consistent supervision. the ecb exercises banking supervision in cooperation with the national authorities by establishing a common approach to ongoing supervision, pursuing harmonized supervisory activities and corrective measures and ensuring consistent implementation of regulations and supervisory policies. the ecb has the powers to conduct supervisory review, on - site inspections and investigations, to issue or withdraw banking licenses, to assess the acquisition and disposal of qualified holdings by banks, to ensure compliance with the eu prudential rules, to set higher capital requirements ( buffers ) to counteract possible financial risks. the supervisory functions of the ecb are exercised by its supervisory board. by a decision of the bnb governing council, mr. radoslav milenkov, bnb deputy governor in charge of the banking supervision department, is the bnb ’ s representative in the ecb ’ s supervisory board, having the same rights and obligations as all other board members, including a voting right. the ecb ’ s supervisory board drafts the decisions that are later adopted