., “ the state and prospects of the euro area recovery ”, speech at the european banking congress, frankfurt am main, 18 november 2016. 9 eurobarometer april 2016. in particular, younger age groups associate europe more with social protection, free movement and a stronger say in the world. 10 see “ the five presidents ’ report : completing europe ’ s economic and monetary union ”, a report prepared by j. - c. juncker, in close cooperation with d. tusk, j. dijsselbloem, m. draghi and m. schulz, 22 june 2015. 4 / 4 bis central bankers'speeches

new financial holding companies, the consolidated capital issue is complicated by the affiliation of banks with institutions that have their own financial regulator and capital regulation. we are in the process of tackling these issues, knowing that responsibility for ensuring adequate management processes and control relies, in the first instance, with a bank ’ s management and its primary supervisor. as umbrella supervisor, the federal reserve seeks to gain an overview of the organization ’ s activities and to detect potential threats to affiliated us depository institutions. the role of a financial and bank holding company supervisor is significantly different from that of a bank supervisor. the difference reflects the difference between an insured depository institution and a nonbank affiliate of the holding company. depository institutions are covered by the federal safety net - deposit insurance and access to the discount window and to other guarantees associated with the federal reserve ’ s payment and settlement system. access to the federal safety net dampens the incentive of investors and creditors to monitor banks ’ risk - taking, which in turn breaks the link between bank risk - taking and funding costs. bank regulation and supervision aims to compensate for the resultant breakdown in market discipline and to limit bank failures that could overwhelm the deposit insurance fund. the financial modernization law did not change the focus of the safety net. but the relative growth of activities in bank holding companies outside the insured depository institution, as well as the increased focus by both management and supervisors on consolidated risk management, may make maintaining the distinction between the insured bank and its increasingly nonbank affiliates more challenging. if we let public perceptions, let alone supervisory actions, blur the distinction, we will surely extend the implicit safety net and expand its moral hazard, to the detriment of efficient markets and, ultimately, at high cost to taxpayers. the recently enacted law provides that, when specialized functional regulators already oversee the new permissible activities, duplication of supervision, and hence excessive regulatory burden, should be avoided. in addition, because market discipline operates more effectively in connection with nonbank activities not subject to the moral hazard of the safety net, regulators should try to avoid diminishing market discipline in the new financial holding companies. thus, the act discourages the extension of bank - like regulation and supervision to nonbank affiliates and subsidiaries. the federal reserve can contribute to this goal by being clear in word and deed that the affiliation of nonbank entities with a bank does not afford them access to the safety net. however, the congress also saw the need for an umbrella supervisor