book value to the amc creates incentives for banks with higher 2 / 5 bis central bankers'speeches coverage ratios and eliminates asymmetries in the cost associated with participation in the proposed scheme. banks undertake the cost of cleaning their balance sheets, not the taxpayer. banks will eventually bear costs for implementing a market - based solution. however, banks may benefit from the introduction of a gradual loss recognition mechanism that allows strengthening of capital adequacy reserves, if necessary. shareholders are not subjected to undue dilution because of loss - triggered dtc conversion. the proposed amc is not envisaged to perform as a servicer ; on the contrary, the scheme will utilize and build upon existing contractual terms of loan servicing companies. as seen in the recent communication published by the european commission in december 2020, the set - up of amcs ( either at national or at european level ) is a policy proposal that is now favored by the european authorities and could lead to a swift cleanup of banks ’ loan books. 4. the main challenges facing banks in europe euro area banks face a number of challenges ; new due to covid - 19 outbreak and existing ones : first, banks are tied - up to macroeconomic and monetary policy developments. despite the projected recovery of the european economy in 2021, risks to the projections remain elevated. the resurgence of the pandemic and the new round of restrictive measures across europe could lead to a longer and deeper recession associated with a wave of corporate defaults, rising non - performing loans and job losses. the low interest rate environment, combined with a sluggish economic recovery, remains a big challenge for european banks, with clear implications for their core profitability and capital generation capacity. a large number of banks ’ obligors is under loan moratoria, which differ across countries and sectors. as i previously mentioned, even though the relevant eba guidelines on moratoria do not eliminate the banks ’ obligation to perform the so - called ‘ unlikely to pay ’ assessment and record the relevant loan loss provisions, there is a widespread feeling that the credit losses from the pandemic are underestimated. the expiration of public support measures, especially those related to fiscal support, could have negative implications to banks ’ cost of credit risk. banks should take action that will facilitate the frontloaded recognition of credit losses as well as the swift clean - up of banks ’ balance sheet through systemic solutions. as already said, the bank of greece has proposed to the greek

already endorsed by the leaders of the four biggest member states, i. e. germany, france, spain and italy ), an idea dating back to german chancellor willy brandt in 1974. this white paper reflects a significant shift in the european integration debate, since a “ europe at many speeds ” had been mainly advanced by intergovernmentalist forces, but stumbled on the adamant opposition of pro - europeans ( federalists ), in favour of centralised / supranational eu governance. 10 / 17 bis central bankers'speeches further progress on european integration issues will of course be slow ahead of the german elections on 24 september that will be decisive in many ways for the future path that the european union, but the question is now all about whether eu affairs will take a turn for the better thereafter. in any event, the european commission is set to present its first set of conclusions on the roadmap for the future of the eu at the december 2017 european council. as should be expected from the european union, there will not be any radical changes overnight, but rather a process ofincremental change to improve the political economy and governance of 11 / 17 bis central bankers'speeches the eu and the eurozone. in my view, this is the best chance to restore faith in the european integration project and show that it is capable of protecting its citizens. 2. towards a complete economic and monetary union / an update of economic policies future steps towards the completion of the emu have been laid down in the well - known “ five presidents ’ report ”, divided into two stages ( short - term and long - term steps ), as shown in the table below. 2. 1 monetary policy : towards an exit strategy according to article 127 of the treaty on the functioning of the european union ( tfeu ), the primary objective of the european system of central banks ( eurosystem ) is “ to maintain price stability. without prejudice to the objective of price stability, the escb supports the general economic policies of the union with a view to contributing to the achievement of the objectives of the union as laid down in article 3 of the treaty on european union ”. this wording suggests that the treaty assigns overriding importance to price stability, as the most significant contribution that monetary policy can make to achieve the objectives of the european union, i. e. favourable economic environment and high level of employment. under the extraordinary circumstances of the crisis, the ecb went beyond its “ price stability ”