disposal. only then, and as a last resort, should it have access to a temporary and fiscally neutral public backstop, the contributions to which should be paid by the private sector either via ex post levies or, more normally, as a result of the reprivatisation of the intermediary institutions ( e. g. bridge banks ) or other good assets resulting from the resolution process. progress in these elements of a future banking union is very important in the present economic environment of low growth. part of the european problem has to do with the situation of the banking sector : pressed for capital, intending to deleverage and risk averse in bis central bankers ’ speeches managing credit risk. consequently, credit is being contained although it is virtually impossible to disentangle the contribution of supply restrictions versus weak demand in explaining the average decline of credit to the economy. in the markets there is the suspicion that banks ’ balance - sheets need more repair with full recognition of potential losses and that is also affecting the lending behaviour of banks. no one has provided clear evidence that this is true and that is why the balance - sheet assessment that the ssm has to conduct before actually starting supervision is so important to re - establish market confidence in our banks to reduce their funding costs. therefore, the establishment of the ssm, the possible use of direct european recapitalisation and the creation of a single resolution mechanism will decisively contribute to the desirable separation of banks and sovereigns. to regain market confidence, restoring full banking sector health must be a priority in order to create improved growth prospects. this is why the banking union project is crucial at this particular moment. economic growth in europe is now essential to complete the adjustment and the rebalancing that have been going on. therefore, it is of paramount importance that the momentum is maintained towards implementing structural reforms at national level and towards building a stronger economic and monetary union through european institutional reforms. i trust that the european parliament will continue to play an active and positive role in this process. i thank you for your attention and stand at your disposal for questions. bis central bankers ’ speeches

high quality modules from the world and just assemble them. the combination - type products are spreading. just for assembling, emerging economies, in which wages and land rents are low, have an advantage. to that extent, the advantage of coordination - type products, in which japanese firms can exert their strength, has declined. japanese firms still maintain high technological competitiveness in the production of core modules and processing equipment. however, technology transfer from japan to emerging economies has been further progressing, and the gap between the two economies has been narrowing. i have often heard that japan should be all right since it has “ manufacturing dna ” that no other country has. the reality is that such dna has gradually been transferring to emerging economies through the shift of japanese firms ’ production bases overseas and associated transfer of product development sections. having said that, in general terms, it may not be an appropriate policy for japanese firms to convert to a combination - type structure. that is because, that case might lead to abandoning the strength japanese firms have accumulated, in addition, to be forced to compete in terms of costs with firms in emerging economies. what is necessary now for japanese firms is not to be complacent about technological advantages, but to develop coordination - type products that respond speedily to and are finely - tuned to consumers ’ needs, and generate a new market itself. such high value - added markets might not necessarily be large. however, if firms cover broadly even such niche markets, those markets as a whole will provide a significant profit opportunity for firms. in that regard, population aging that has been progressing in japan could be a catalyst. consumer needs of the elder generation are highly versatile than younger generations, to the extent that elderly people have wide dispersion in income and asset formation. if firms can make finely - tuned responses to those needs, it will lead to stimulating potential demand, namely, exploiting niche markets. in the near future, population aging will progress in china and many overseas economies. if japanese firms can move ahead in product development and accumulation of business know - how in the aging population, it will lead to an increased chance for those firms to benefit from the first mover ’ s advantage overseas in the future. however, challenging various niche areas ahead of other firms entails risk. on this point, there are critics who argue that, by referring to the fact that the establishment rate of firms in japan remains at about half that in united states and europe, japanese dna is stabilityori