authorities, while the rest of the system will be indirectly supervised by the ecb through the national supervisors. in numbers, out of approximately 6, 000 credit institutions in the eurozone, the ecb will directly supervise around 130 banks, covering around 85 % of total banking assets. the single mechanism will be based on the idea of centralised supervision, offering a common view for the supervision of the whole sector, while building on the knowledge and expertise which exist at national level. this common view will be established in a set of rules and standards which will be laid down and developed by the eba and the ecb itself. with the single rulebook as a basis, other instruments will also ensure that the same approach is used in the supervision of all banks. this will include the supervisory manual and ecb regulations, guidelines and general instructions. bis central bankers ’ speeches resolution of credit institutions single resolution, the second pillar of the banking union, is a necessary complement of single supervision. it is essential that if a bank enters into difficulties, it may be efficiently resolved with no or minimal costs for european taxpayers and with little impact on the european financial system and on the real economy. the draft regulation on single resolution, submitted by the european commission to the council and the parliament last july, builds on the concept, envisaged by the european council more than a year ago, that is, a resolution system comprising a single resolution authority and a single resolution fund. in such a system, resolution will be based, first and foremost, on common eu “ bail in ” rules, whereby banks ’ shareholders and creditors should first bear the cost of a bank resolution. only if this were not enough, would the single resolution fund – meaning, the industry – step in, making the fiscal backstop the very last resort. this “ bail in ” principle is embodied in the proposal of the bank recovery and resolution directive which was approved by the ecofin last june ; we expect that it will be approved shortly by the european parliament. obviously, this directive will enter into force in all eu member countries, independently of their participation in the banking union. however, the regulation establishing the framework for a single resolution mechanism or authority and a single bank resolution fund is just beginning to be negotiated, after, as i said before, a draft was presented by the commission in july. ideally, the regulation should be in force by january 2015, but we all know that there are difficult political and technical problems, in particular in relation to the

fact, the ecb will indirectly supervise such banks, having access to their data and the power to assume, if so decided, the direct supervision of any of them. it is important to underline that this is not going to be a two - tier system, but a single one with a distribution of tasks ; this is not going to be a “ confederation ” of supervisors, but an “ union ” of supervisors under a single european authority. preparatory work already done to launch the single supervisory mechanism at this point, i will briefly describe the work we have done, how the ssm is going to be set up in organisational terms, and the work ahead of us. steered by a high - level group on supervision, chaired by the president of the ecb, a preparatory structure has laid down the work schedule regarding the following areas : ( i ) the mapping of all the eu banking institutions, to determine the supervisory regime applicable under the single mechanism regulation. ( ii ) the preparation of the organisational framework, which will include the practical arrangements for cooperation between the ecb and the national authorities, within six months of the entry into force of the single mechanism regulation. ( iii ) the drafting of the ecb supervisory manual, which will address procedural and methodological matters, including the risk assessment system that the single mechanism will implement, on - site inspections and other processes that form an integral part of the supervisory review process. ( iv ) the introduction of the technical standards on prudential and accounting supervisory reporting, which will allow a significant degree of cross - country consistency to be achieved regarding the periodic confidential reports that banks file with supervisory authorities. ( v ) a comprehensive assessment of the credit institutions of the participating member states, including a balance - sheet assessment at a given point in time. i will elaborate on this in a moment. integrating seventeen national supervision systems ( some of them made up by two authorities ) along with the ecb in order to set up the single supervisory mechanism is, indeed, a major challenge. the centrepiece of this integration has been the concept of joint supervisory teams ( jsts ), which are going to take care of the direct supervision of the significant banks. these teams will be made up of supervisors from the ecb and from the national authorities ; under the guidance of an ecb coordinator, they will be entrusted with the supervision of each of the bis central bankers ’ speeches significant banks. these teams are, therefore, to be the backbone of the direct supervision by the