##ity across the entire banking group. while a european deposit insurance scheme might reduce the incentives for governments to restrict the free flow of capital and liquidity, 1host countries argue in favour of preventing healthy institutions in 2 / 3 bis central bankers'speeches one country from “ bleeding out ” to unhealthy parts of a group in other countries. furthermore, decision - makers might want to keep banking services in their country for consumers whom they don ’ t want to see losing access to such services. we could try to alleviate such concerns through group - wide guarantees which take into account such concerns to avoid misalignments between financing and decision - making across borders. if contractual arrangements are not considered sufficient, maybe publicly endorsed standardised templates on the triggering and functioning of waivers, and information - sharing could bring us closer to a fully functioning european banking market that would also benefit consolidation. some argue the ecb should look much closer to home for unwarranted obstacles to consolidation. i would not exclude to revisit our assessment criteria, also about the treatment of npls in m & a. and what about the capital we require merged entities to hold? do our requirements appropriately reflect the synergies reaped by mergers? as a supervisor, we step up our scrutiny of merged entities, at least at the start of their life, as we recognise the operational risk challenges posed by merging complex structures. that should not lead to double - counting, though. to go as far as to allow for a temporary reduction of post merger capital levels would however need robust arguments. our risk - aversion is not meant to block marketdriven consolidation initiatives – and should not be understood as such. conclusion ladies and gentlemen, by reaping synergies, consolidation may help banks to address one of their most pressing challenges : how to reduce costs. that does not mean though that consolidation is the answer to everything. and it might not always be in the consumer interest. as a supervisor, we take a neutral stance. we assess merger and acquisition proposals solely on technical grounds. it is for markets to decide whether or not consolidation takes place, and to what extent. market forces should, however, not be undermined by unnecessary obstacles. while it is up to individual banks to futureproof themselves, policymakers and legislators can provide the right conditions. seven years after the banking union was first proposed, it is about time for a single european banking market. 1 see mersch, y. (

change ) surplus / defic surplus / deficit it ( % of gdp ) ( % of gdp ) general government debt ( % of gdp ) current account balance ( % of gdp ) 10 - year government npls amount bond yield & spread ( % of total loans ) vs 10 - year bund greece 2, 5 3, 9 0, 9 178, 0 0, 4 46, 6 % ( as of q3 2017 ) feb 2018 : 4, 11 % 336 bps ireland 1, 6 - 1, 8 - 6, 1 119, 4 2, 1 25, 7 % ( as of q4 2013 ) jun 2013 : 4, 13 % 240 bps portugal 0, 9 - 2, 3 - 7, 2 130, 6 - 0, 3 11, 6 % ( as of q2 2014 ) dec 2013 : 6, 04 % 410 bps cyprus 3, 0 3, 0 0, 5 107, 1 - 4, 9 48, 5 % ( as of q1 2016 ) nov 2015 : 4, 02 % 345 bps source : bank of greece. i intend to skip here the latest heated debate on cash buffers vs. a precautionary credit line, for 2 reasons. firstly, they are both short - term solutions, maximum one plus one year, but the real question remains what comes next after the first post mou - year. this is the question i propose to focus on, namely : what needs to be done in order for the country to achieve a permanent sustainable return to the capital markets, like the pre - 2008 status. it will be the sequel question to either cash buffer or precautionary credit line the country will inevitably have to face in a year or so. i want to open this debate from here today by making a number of proposals that will make such a return feasible in the foreseeable future. secondly, this economic debate has turned into a saga, it ’ s a politically controversial issue, as it is quite often the case in greece, some have called it ‘ sour grapes ’ – and i don ’ t want to go into that territory. the truth of the matter is that we have in our hands a eurogroup decision of 15 june 2017, which is an agreement between the government and our lenders in view of the ending of the current programme in august 2018 and i quote : “ europe commits to provide support for greece ’ s return to the market … ” and “ to further build up cash buffer