. the european resolution fund should have access to a temporary emergency facility that is fiscally neutral in the medium term, meaning that any temporary public support will be recouped by ex post levies on the industry. bis central bankers ’ speeches restoring financial integration will unburden monetary policy from a monetary policy standpoint, the banking union will alter neither our policy objective nor our policy strategy. the pursuit of price stability as our prime objective is set out in the eu treaty. we have delivered on our mandate. however, the banking union will change the environment in which we conduct our policy for the better. a banking union has the potential to unburden monetary policy in two important dimensions. first, the banking union has important implications for the ecb as liquidity provider to the banking system. sound supervisory assessments and access to a powerful resolution framework is paramount for ensuring liquidity provisions to sound and solvent counterparties. in its role as supervisor, the ecb will have strong incentives to make sure its supervision is rigorous in order to protect our balance sheet and to ensure tight control over the risks we assume. this will safeguard our independence and credibility as monetary policy maker and will ensure that monetary policy is not affected by considerations outside of the realm of monetary policy, for example the state of the banking sector. this is particularly important in the context of our emergency liquidity assistance ( ela ), the provision of which is based on a sound and reliable solvency assessment. in the future, we will have these assessments at hand “ in house ”. moreover, a strong resolution framework, with effective tools for orderly resolution, will in turn help to remove the pressure on the central bank to unduly prolong the life of banks through liquidity provision. second, the banking union will help to unwind the reliance of the euro area banking sector on central bank intermediation. as mentioned, during this crisis we have activated a set of nonstandard monetary policy tools that – by nature – were intended to alleviate impaired monetary policy transmission and ultimately serve our primary objective to maintain price stability in the euro area. by alleviating funding pressures and undue risks in securities markets, our measures have provided temporary relief for the banking sector and complemented policy efforts on the financial stability front. however, our measures cannot and should not solve the underlying structural problems. this is a task for governments and the banking industry. in this regard, the banking union with effective supervision and bank resolution can foster the necessary restructuring in

increasing geographic scope of some banking activities, and the increased importance of nonbank providers of financial services are some of the factors altering the financial marketplace. while many of these changes may have increased financial system efficiency and lowered costs for consumers, they also present new and sometimes difficult challenges for community banks. these changes have coincided with a significant consolidation of the banking industry and a pronounced decline in the number of community banks. if we define a community bank as any bank or thrift organization that has total real assets of less than $ 1 billion, in 2002 dollars, the number of community banks has declined about a third over the past decade. most of this consolidation has been due to mergers. a federal reserve board staff study reports that between 1994 and 2003 there were more than 3, 500 bank and thrift mergers ( pilloff, 2004 ). in more than 90 percent of these mergers, the target institution had less than $ 1 billion in total assets, and in about half of those cases the acquiring organization also had assets of less than $ 1 billion. acquiring organizations were typically larger than their targets ; about 50 percent of the transactions involved an acquirer that was at least ten times as large as the target institution. although merger activity has slowed since the 1990s, there were still at least 200 mergers each year between 2000 and 2006. despite these changes, community banks continue to fill an important niche in banking, providing relationship loans in specific business and economic sectors ( most notably small - business and agricultural lending ), personalized service, and a local presence. indeed, we have a considerable body of evidence that points to the value and viability of these institutions. for example, despite the decline in numbers that i just mentioned, there are still more than 7, 000 community banking organizations, accounting for about 95 percent of all banks and thrifts in the united states today. furthermore, new community banks continue to be formed. during the period 2000 through 2005, about 120 new community banks were chartered, on average, each year. and during the first three quarters of 2006, 137 new community banks were chartered. these figures suggest that many people continue to believe that community banks have an important niche to fill and, as a result, are willing to invest in the future of community banking. a variety of indicators suggest that as a whole, today ’ s community banks are doing well. the average return on equity ( roe ) at community banks, for instance, is quite solid and has improved over the past few years. net