at subsidiary level ( host ) are addressed ; and the choice between subsidiaries or branches, together with the supervisory powers of host national competent authorities ( ncas ). in this context, the transformation of subsidiaries into branches has emerged as an answer to the host responsibility for covered deposits – however that implies, at least, when local undertakings are of systemic relevance to the concerned member state, that : domestic supervisors should have a say in the day - to - day supervision and should have the capacity to react to strategic decisions affecting branches as they would have had 1 / 2 bis central bankers'speeches had it been a standalone entity ; national resolution authorities are adequately involved and empowered in the definition of resolution plans and in the resolution action when it occurs. 2. second, solutions need to be found for the orderly exit of traditional medium - sized deposittaking banks without disrupting financial stability. whereas mrel and bail - in requirements may work for larger banks, there may be no clear room for a ‘ middle class ’ of institutions whose business model may be incompatible with mrel requirements ; institutions that may be of no public interest at eu level but still have systemic relevance at local level. instead of moving immediately towards a further straitjacketing of member states ’ room for manoeuvre with the harmonisation of eu banks ’ liquidation regimes, efforts must be made towards the establishment of an enabling framework for the “ orderly ” winding - down of locally systemic relevant banks, combining elements of the resolution and liquidation frameworks, while preserving value and protecting creditors and non - financial borrowers. possible paths to be explored might include : the establishment of special insolvency proceedings, with recourse to administrative options, attributing some of the instruments currently envisaged in the brrd for banks in resolution to a liquidating authority, as an alternative to the ‘ atomistic ’ court - led liquidation regime. ( the liquidating authority and the funding sources available would need to be identified. ) ensure effective financing of the deposit insurance systems for deposit transfers abiding by the least cost principle with the liquidating authority having the option to offer guarantees or enter into profit and loss sharing regimes. ( for that, a revision of the applicable state aid rules would be required. ) recent calls to form a sort of european fdic, merging the single resolution fund and edis into one single entity, merit our attention in this regard in the medium - term, provided that the legal framework is fixed and that financial stability

assistance programme : the budget deficit significantly declined and public debt is now on a downward trend ; private sector deleveraging is ongoing ; and the banking sector is more robust, with a stronger liquidity position, higher solvency ratios and improved asset quality. the adjustment programme has widely been regarded as a success. in my view, this success was due to three factors : 1. first, programme ownership. portugal was committed to the implementation of the programme, which was accepted by the population. a constructive dialogue with social partners was possible and this was key to ensuring the success of the quarterly reviews. 2. secondly, the speed and intensity of the response from the tradable sector, in particular exports, was key to the rapid rebalancing of external accounts and mitigation of the impact of lower domestic demand on the non - tradable sector. 3. third, the maintenance of confidence in the banking sector, as evidenced by the behaviour of deposits. this was crucial to preventing the economy from collapsing with a credit crunch and avoiding the imposition of capital controls. it is important to remember that an adjustment programme is always a short - term programme whose effects are only sustainable if there are structural and institutional adjustments that prevent repetition of the conditions that led to the need for adjustment. as such, notwithstanding the undisputable progress, there is no room for complacency. 2 / 3 bis central bankers'speeches a lasting trajectory of growth and convergence towards our european partners depends on our capacity to generate and maintain high levels of employment and productivity. this is a necessary condition to ( i ) bring our workers ’ wage levels closer to european standards ; and ( ii ) finance the welfare state in a context of unfavourable demographic developments. the challenge is thus one of activating the ‘ levers ’ of employment and productivity. i will briefly highlight the four most critical ones. 1. first, investment. it is vital to increase both the stock of capital and investment in intangibles, learning from past mistakes, particularly by scrutinising investment projects in a far more demanding way. of course, we cannot ignore the fact that the recovery in investment is constrained by the ( still ) high indebtedness level and low savings rate of the portuguese economy. this means that higher investment will have to be financed through an increase in equity, either from existing shareholders, or the entry of new domestic or foreign shareholders. 2. second, skills. in portugal, employees ’