lower the adjustment costs associated with asymmetric shocks affecting one particular country or region. although considerable progress has been made, much remains to be done. ladies and gentlemen, allow me to also stress the importance of your role in contributing to informing european citizens about the dangers caused by divergences in price developments across countries or regions, which might arise as a result of excessive wage increases or the unsustainable expansion of profit margins at the local level. the more such developments become entrenched in the economy, the more they will lead to a loss in competitiveness and, eventually, to a loss in output and employment in the respective economies. clearly, our efforts to make the euro a success will require all of us to master – at home – the challenges which i have outlined. however, the european union, and also the euro area, face an important external challenge – and this brings me to the second topic of my presentation : the eu accession process and the subsequent enlargement of the euro area. the fact that your committee has established a liaison group with applicant countries bears witness to the substantial implications which enlargement will have not only for a central bank but also for representatives of regional and local authorities. as you are well aware, to date 12 countries from central, eastern and southern europe are involved in negotiations to become members of the eu and, ultimately, also of the euro area. the integration of such a large number of new countries into the european union – which would imply almost a doubling of the current number of member states – will be an enormous task for both sides and be without a precedent in history. as i have just said, accession to the eu also entails significant implications for the economies of the accession countries themselves. for them, the main priority is indeed to foster the convergence process with the eu, both in real and in nominal terms. thus, accession countries are aiming to achieve the european union's standard of living, while at the same time seeking macroeconomic and financial stability. this process will entail profound and comprehensive adjustments in their real economies as well as in the careful design of sound economic policies. undoubtedly, significant progress has already been made in this respect. a substantial reallocation of resources, a strong reorientation of trade links towards the eu, a complete institutional overhaul and a sizeable development of the private sector are the most obvious signs of systemic change. however, these achievements should not give rise to complacency but rather be taken

hedge risks or wants to acquire another company? who does a saver turn to when he wants to deposit money? who does a family turn to when it needs a loan to buy a home? here in europe, all of them would most likely turn to a bank. banks provide a vital service to the economy. without them, the economy would not work. all this leads us to a crucial question : how can we ensure that banks reliably serve the economy? long taken for granted, this has become the holy grail of banking regulation and supervision. and it has become the ultimate goal of all the relevant reforms that have been undertaken since the crisis. and much has been done. we have revamped the global standards for capital and liquidity – basel iii. rules for banks are now much stronger than they were before. and the same is true for supervision. just think of european banking supervision, which was set up in 2014. all this will help to make banks more resilient, so that they can reliably serve the economy. but there is one thing which neither rules nor supervisors can do. they cannot prevent each and every bank from failing. and in my view, we should not even try to. the possibility of failure is inherent to any kind of business, and it is a core element of well - functioning market economies. 1 / 9 bis central bankers'speeches no, it is not the job of supervisors to keep individual banks alive. we, in particular, must not lower our standards to cater for the weakest bank. it would also be wrong to assume that each bank, even the weakest, just needs time to sort itself out. it would be wrong to assume that the local economy just needs to grow for a few more years for the bank to recover. the result would be weak banks that stagger on, zombie - like, barely able to survive in good times. in short : such supervisory forbearance distorts the market and weakens the entire banking system. supervisors would become part of the problem. obviously, we shouldn ’ t overdo it either. if justified, banks should always have reasonable time to comply with new rules and standards. think, for instance, of the transitional phases for the basel framework. but the standards themselves should not be weakened. all this leads us to an interesting conclusion. obviously, it was a problem that banks failed during the crisis. but taking a long - term view, i would argue that