benoit cœure : laying the foundations of the cypriot recovery keynote speech by mr benoit cœure, member of the executive board of the european central bank, at the 10th cyprus summit “ current developments in the euro area ”, nicosia, 4 november 2014. * * * ladies and gentlemen, today is an important day for the ecb and the euro area. the ecb has become the banking supervisor for the euro area, directly supervising 120 significant banks, including four banks based in cyprus. this marks the single biggest step in european economic integration since the inception of the euro. we are ready for this step, but we are also very well aware of the important additional responsibility we will be taking on. the economic and financial landscape is changing, not only in the euro area but also here in cyprus. since the start of the international financial assistance programme, important steps have been taken to stabilise and restructure the banking system, correct macroeconomic imbalances and create the conditions for a renewed economic recovery. my main message today is that a healthy and well - functioning banking system is crucial in this regard, both in the euro area and in cyprus. but let me begin by saying a few words on the economic situation in the euro area. i ask for your understanding that my remarks on the economic outlook should not be construed as providing indications on the perspective monetary policy stance of the ecb, as we are in the so - called quiet period, during which the members of the governing council refrain from comments on the current outlook for monetary policy. the legacy of the crisis weak demand, high debt and unemployment - continues to weigh on the pace of growth. unless an adequate mix of monetary, fiscal and structural policies is in place to create confidence and sustain private consumption and investment, we once again run the risk of a self - fulfilling loss of momentum and a delayed recovery. from our side, we are fully committed to play our part in this policy mix, which is to fulfil our mandate and bring inflation back towards 2 %. but it is also clear that our monetary policy stance can only have its full impact on the real economy if the banking system is in good financial shape. let me therefore turn to a key step we are currently taking which will support that process : the ecb ’ s comprehensive assessment of bank ’ s balance sheets. the comprehensive assessment the comprehensive assessment was one of the pillars of our preparatory work before taking over banking supervision. it involved over 6,

that financial systems in one country outgrow the capacity of national taxpayers to support them. the implications of this experience are profound. as i have argued, they point to the need for a much greater euro area and eu perspective in the supervisory and regulatory framework. while progress has been made in this domain, much remains to be done. thank you for your attention. lamfalussy, a. et al. ( 2001 ). final report of the committee of wise men on the regulation of european securities markets, http : / / ec. europa. eu / internal _ market / securities / docs / lamfalussy / wisemen / final - report - wise - men _ en. pdf bis central bankers ’ speeches