##wing the seeds for the next crisis. i would like to reiterate the concerns that my us colleagues stanley fischer and janet yellen have also voiced. signs that ten years on, lawmakers now want to roll back post - crisis regulations, are troubling. the analogy of the swinging pendulum might be conceptually appealing, but it is overly simplistic. it suggests an inevitability and automaticity that should be resisted. let me take mrel as an example. the brrd and subsequent regulatory technical standard developed by the eba provided a good basis to determine mrel. on top of that, the fsb delivered the tlac standard for g - sibs. the fsb rightly added that loss - absorbing capacity should be subordinated and of sufficient quantity to truly shield taxpayers and depositors from losses, if we are serious about ending not merely reducing too - big - to - fail. now that we are close to setting binding mrel targets and are about to implement tlac in europe, i do see some classic symptoms of cold feet. there is no denying that pressure is mounting to soften the rules and their application. concerns focus on impact, the costs to banks and the real economy of resolvability requirements on top of supervisory requirements. but in this discussion, the essence of the measures – the large benefits of resolvability to the real economy and society – tends to be neglected. i do not claim that the resolution framework runs like clockwork. here and there rules could be revised, without compromising their objectives. for instance, we need to consider current heterogeneity in the euro area. and think about solutions for banks that have large mrel shortfalls and lack market access. to those who claim that the mrel framework needs a major overhaul : please be specific. then we can have an informed discussion about the pros and cons. as i said, attractive as it may be in its simplistic inevitability, the image of the pendulum is ill - suited to breaking a paradigm like too - big - too - fail. my second message to the panelists and the audience is to address the elephant in the room : “ fury ”, or funding in resolution. in theory, adequate resolution planning should enable the resolution authority to restore the viability and solvency of the entity under resolution. as a result, the phoenix that rises from the ashes on monday morning should be able to command

shocks. banks became mired in painful but necessary balance sheet repair efforts. as a result, they have been restrained in supporting economic recovery. banks ’ crucial role in the financial intermediation of the euro area explains why many monetary policy interventions during the crisis were aimed at repairing the bank lending channel. the ecb was confronted with a systemic liquidity squeeze, and had to accommodate the funding needs of the banking sector. as such, we averted a self - fulfilling solvency crisis and resulting monetary contraction. nevertheless, many euro area banks lost their willingness and ability to keep pumping credit into the real economy. this required further flexibility in our policy framework, such as targeted long - term refinancing operations and a negative interest policy. partly as a result of these extraordinary measures, the monetary transmission is working more smoothly. lending rates have eased, and the credit supply has picked up. to sum up, the crisis illustrates the importance of quickly restoring the banking system, both for the real economy and the effectiveness of monetary transmission. it has also exposed the limits and downsides of monetary instruments. central banks can provide liquidity support but cannot restore the solvency of banks. excessive reliance on central banks in fact delays the necessary adjustments. cheap funding may prop up non - viable banks for too long, while making them less and less resolvable. the significance of resolution for the monetary and banking unions is without question. in the euro area there are clear further constraints to resolving banking problems. unlike the us, there is no single fiscal policy that can dampen shocks across member states. and unlike the us, we do not yet have a single deposit insurance system that can provide confidence to all depositors, even if an idiosyncratic shock hits a particular member state. also, capital markets as alternative to bank intermediation are relatively underdeveloped compared to the us. hence, to ensure the stability and sustainability of the euro area, making banks resolvable is essential. as this session is about the road ahead for resolution, let me raise two specific issues for discussion. the first one concerns pressure on regulators to soften rules designed following the financial crisis. it is often said that financial regulation moves like a pendulum, swinging back and forth between opposite states. when a crisis occurs, there is a call for tighter rules, and the pendulum swings. over time, as memory fades, there is a push for deregulation and fewer rules. thus the pendulum swings back, possibly so