a healthy warning. but if it takes a form where pluralist democracies and independence of institutions and rule of law are questioned, the situation can become very serious. then resilience of the rule of law and independent institutions can be tested. in the long - run such tensions within societies, especially if they persist, can be detrimental to economic development. moreover, damage to the cohesiveness of a society may be hard to repair after such periods. 2 / 2 bis central bankers'speeches

erkki liikanen : the proposed regulation on structural measures for banks comments by mr erkki liikanen, governor of the bank of finland and chairman of the highlevel expert group on reforming the structure of the eu banking sector, on the european commission ’ s proposal of 29 january 2014 for a regulation on the separation of certain trading activities from credit institutions. * * * the european commission has today presented a regulatory proposal based on the report of the high - level expert group on reforming the structure of the eu banking sector. in october 2012 our group proposed that proprietary trading and certain risky trading activities including market - making as well as exposures to shadow banking entities such as hedge funds ought to be separated from deposit - taking and lending activities. the commission proposal has the same objectives as the recommendations in our final report. the set of activities which the proposal would affect are also similar. in some respects, the proposed regulation does, however, differ from our recommendations. the commission ’ s proposal includes an outright ban on organised proprietary trading instead of requiring it to be assigned to a separate and separately capitalised legal entity. in this respect the commission proposal resembles the structural reform implemented in the united states. this would allow for regulatory convergence at the international level. as for market - making, risky securitisation and complex derivatives, the proposal empowers the competent authority to require separation when specific conditions prevail and also empowers the competent authority to require separation of other trading activities. the high - level expert group asked the commission to work on the calibration of the thresholds for application of the new rules. the commission has accordingly included the thresholds in its proposal. the proposal would cover the largest and most trading - intense banks in europe. while striving for the same objectives as the high - level expert group, the commission proposal leaves an important role for the future judgment of the competent authorities, the eba and the commission itself. in implementation of the regulation, the commission could grant individual credit institutions derogations from application of the regulation if national primary law in their home country is already adopted and considered at least as stringent as the regulation itself. moreover, competent authorities or member states may decide to impose similar measures also on some smaller banks, or exempt some qualifying banks from the requirement if these banks can demonstrate that they do not compromise the objectives of the regulation or threaten financial stability. these elements of discretion entrust the competent authorities, the eba and the commission with