an appropriate transition period. also to be noted is that these standards are global minimum standards : national regulators or supervisors can set tougher standards if they deem that appropriate. on your last point i will say that it is imperative that we make as sure as possible that a new crisis of that dimension would not erupt again. we could avoid a great depression only because governments, in all advanced economies, provided the financial sector with considerable public support. this in my view will not be repeated because our democracies will not mobilize such an amount of tax payers ’ financial risk taking twice. this is why it is absolutely essential that we make the whole financial system much more resilient, including through the basel iii agreement. politis : some still insist that the banking problems still exist. we have seen ireland just recently injecting capital into one of its major banks. are you confident about the soundness of euro zone banks? trichet : as you know, a comprehensive stress test exercise, covering 91 eu banks, was finalized in late july. the ecb welcomed this exercise, which was prepared and conducted by the committee of european banking supervisors ( cebs ) and national supervisory authorities, in close cooperation with the ecb. this stress - testing exercise was comprehensive and rigorous, and the results confirmed the resilience of eu and euro area banking systems as a whole to severe economic and financial shocks. the stress test has also significantly enhanced transparency regarding the current financial conditions and risk exposures of the 91 institutions that participated in the exercise. we also welcome the commitment made by national authorities with regard to the provision of support facilities for banks where private sector means are insufficient. sound balance sheets, effective risk management and transparent, robust business models are key to strengthening banks ’ resilience to shocks and to ensuring adequate access to finance, thereby laying the foundations for sustainable growth, job creation and financial stability. politis : will the break up of banks into investment banks and traditional banks make the ecb ’ s and other regulators task easier? will this be beneficial for the whole economy in general? trichet : the proposals aiming at affecting the structure of the financial sector, by limiting the scope of activities an institution can undertake, are important contributions to the debate on how to best regulate the banking sector. however, as regard the specific european framework, i believe that introducing a separation between investment and commercial banking would raise a number of complex issues. first, it would be in contradiction with the established

term rates were accompanied by falling forward rates. but the reverse is also possible, with term premiums moving more steeply than appropriate for underlying economic conditions, which we saw in the so - called taper tantrum episode in 2013. certainly, my colleagues and i are mindful of recent episodes in which we have seen unusually sharp spikes in market volatility. accordingly, i expect that the fomc will continue proceeding to the greatest extent possible in a very deliberate manner, aiming to provide clear communications about committee members ’ assessments of the economic and policy outlook. based on today ’ s picture of moderate underlying momentum in the domestic economy and the likelihood of continued crosscurrents from abroad, the process of normalizing monetary policy is likely to be gradual. it is also important to remember that the stance of monetary policy will remain highly accommodative even after the federal funds rate moves off the effective lower bound, because the real federal funds rate will initially still be low and because of the elevated size of the federal reserve ’ s balance sheet and the associated downward pressure on long - term rates. moreover, the fomc has stated clearly that it will for a discussion of the effects of worker bargaining power on the natural rate, see andrew figura and david ratner ( forthcoming ), “ the labor share of income and equilibrium unemployment, ” feds notes ( washington : board of governors of the federal reserve system ). for a discussion of the effect of labor market churning on the unemployment rate, see steven j. davis, r. jason faberman, john haltiwanger, ron jarmin, and javier miranda ( 2010 ), “ business volatility, job destruction, and unemployment, ” american economic journal : macroeconomics, vol. 2 ( april ), pp. 259 – 87 ; and michael feroli ( 2014 ), “ u. s. : the consequences of economic calcification, ” j. p. morgan economic research note ( new york : jpmorgan chase, september ), as noted in james pethokoukis ( 2014 ), “ america suffering from ‘ economic calcification ’ – jp morgan, ” aeideas ( blog ), september 2. bis central bankers ’ speeches reduce the size of the balance sheet in a gradual and predictable manner starting at an appropriate time after liftoff, which will depend on how economic and financial conditions evolve. in summary, the string of soft data in the first quarter raises some questions about