banks that have more geographically diversified loan and deposit portfolios are more resilient to local shocks and can keep their lending activity more stable. we must hence continue enhancing the conditions for cross - border banking in the euro area. the first step is to reduce the legacy non - performing loans on banks ’ balance sheets which have hampered cross - border lending and m & a transactions over the past few years. 6 that would then pave the way for the completion of the banking union, which we need to reinforce in order to boost confidence in the resilience of the whole financial sector. financial market fragmentation may be exacerbated by perceived or actual differences between the national safety nets for banks which undermine the banks ’ capability and willingness to expand their cross - border activities. the introduction of a common and credible fund for the single resolution mechanism ( srm ) would inspire confidence that banks can be resolved more efficiently, regardless of their location. likewise, the creation of a european deposit insurance scheme ( edis ) would enhance depositor confidence throughout the euro area and create a level playing field for banks. the main benefit of edis is that it will generate confidence in the financial system as a whole. provided that the standards on minimum requirements for own funds and eligible liabilities ( mrel ), total lossabsorbing capacity ( tlac ) or other risk reduction measures are not eroded, edis will probably never be deployed at all. at the same time, we should not fail to mention that especially smaller institutions have next to no experience in accessing capital market funding. this makes it more difficult to rigorously apply the mrel requirements. moreover, the introduction of such security mechanisms at european level could give national governments less incentive to restrict the free flow of capital and liquidity ; this would in turn promote cross - border activity. but edis must be incentive - compatible. its introduction must not result in any retrospective sharing of the burden of legacy non - performing loans. and in order to avoid systematic transfers between banking sectors, the banks ’ contributions to the fund should be structured to reflect banks ’ risk appetites. strengthening the institutional architecture of economic and monetary union these economic and fiscal reforms are essential in order to make the euro area more resilient. however, they cannot fully prevent the risk of severe economic shocks. in the future too, effective crisis management will be indispensable to protect the member states from serious imbalances. in this respect, i am very much in favour

yves mersch : in the spirit of european cooperation introductory remarks by mr yves mersch, member of the executive board of the european central bank and vice - chair of the supervisory board of the european central bank, at the salzburg global webinar, 2 july 2020. * * * the judgment of the german federal constitutional court on the ecb ’ s public sector purchase programme ( pspp ) is a reminder of the confederal nature of the european union. the judges themselves noted that “ certain tensions are [ … ] inherent in the design of the european union ; they must be resolved in a cooperative manner, in keeping with the spirit of european integration, and mitigated through mutual respect and understanding. ” 1 in this spirit, the ecb – which is exclusively subject to the jurisdiction of the court of justice of the european union and accountable to the european parliament – supports the deutsche bundesbank in its cooperation with the german federal government and the bundestag. the constitutional court is of the view that the federal government and the bundestag have a duty to ascertain that an assessment is conducted in relation to the proportionality of the pspp. bundesbank president jens weidmann thus recently requested that the ecb authorise the disclosure of a number of documents to those to whom the judgment is directed, namely the federal government, which may then share these documents with the bundestag if necessary. we authorised the disclosure of these documents on the condition that their non - public elements are treated confidentially. in 2018 the court of justice ruled unambiguously and finally on the legality of the ecb ’ s asset purchases. it also found that the ecb provided sufficient proportionality considerations. 2 the ecb ’ s governing council constantly evaluates the potential side effects of its monetary policy measures – including the pspp. this evaluation is part of the proportionality assessment underpinning the ecb ’ s policy choices and is publicly available. you can get an idea of what i am referring to from our latest accounts3 ( published last week ), which show the depth and comprehensiveness of the governing council ’ s discussions, including on the effectiveness, efficiency and potential side effects of our monetary policy decisions. this public evidence demonstrates that we take the potential risks and side effects of our decisions very seriously. and it should help with more balanced communication of our decisions in all countries, including germany. the german authorities have access to the answers to the 43 questions we received