##economic scenarios. based on this information, analyses are now under way to assess the sustainability of business models and identify vulnerability factors, including cost dynamics, in good time. the results of these studies will be an important basis for our discussions with intermediaries. in the same period, also in view of targeted longer - term refinancing operations reaching maturity, we asked almost all less significant banks to update their funding plans, which the ecb already systematically gathers for significant banks. on 28 june, around €150 billion of the €300 billion outstanding tltro funding was repaid. in keeping with the plans, banks almost exclusively used excess liquidity, which has recently increased thanks to bond issuance and repo funding. recourse to new central bank refinancing operations has been limited so far. 4 / 11 bis - central bankers'speeches banks should draw more heavily on these refinancing operations to cover future repayments. moreover, significant banks anticipate further issues of bonds – including retail bonds – and, to a lesser extent, an increase in customer deposits. smaller banks claim that they will rely more on the latter. the idea of increasing deposit funding clashes with expectations of a further reduction ( at the aggregate level ) in this form of funding, which is already suffering from competition with alternative forms of investment. at present, the extensive availability of assets eligible as collateral for refinancing operations ensures that funding needs can be met, albeit probably at higher costs than anticipated. non - bank intermediaries under our supervision are subject to rules that are in many cases stricter than those in force in other european countries. in addition to refining the supervisory review and evaluation process for these intermediaries as well, we regularly check the systemic importance of alternative investment funds, whose assets under management, although still limited, have doubled over the last ten years. we pay special attention to credit and real estate funds. specific supervisory measures were taken for servicers to preserve the efficiency of the secondary credit market, which has played a key role in reducing non - performing loans on banks'balance sheets through securitization operations. initial results reveal shortcomings in governance and control, as well as delays in updating recovery plans. the ongoing discussion aims to assess the adequacy of the remedial measures, also with a view to improving the quality of the information provided to the market on the performance of managed operations. some of these operations are lagging

it is vital to avoid any lowering of standards and instead to converge on the best practices in supervisory methodology, modelling and assessment of banking risks. this will ensure early warning of emerging instability at individual banks and at systemic level. we attach special importance to aspects that are a fundamental part of the tradition of the bank of italy, such as the central role of on - site inspections, methodologically robust quantitative analysis, and close interaction with banks. if successfully managed, the ssm will bring substantial benefits to the single market : it will improve the effectiveness of monetary policy transmission, counter the ring - fencing trends observed in the last years, thus fostering financial integration, facilitate comparison between banks and banking systems in different countries, and in this way improve the monitoring, control and mitigation of vulnerability factors. work is also continuing on the single resolution mechanism ( srm ), the second component of the banking union. this is indispensable to align the responsibilities for supervising banks and handling crises. the bank recovery and resolution directive is intended to harmonize the heterogeneous national practices, rules and tools for bank crisis management and keep rescue operations from being financed with public funds. the directive lays down a number of preventive measures, together with rules for timely intervention and resolution, including the bail - in of bank creditors. a fund to be financed by the banks themselves will be earmarked for bank resolution. the european commission recently issued a proposal for a regulation – which should be fully operational in 2015 – to institute an srm under a single bis central bankers ’ speeches resolution authority and with pooled resources. concerning the third component of the banking union, a draft directive has been prepared to implement a common network of national deposit guarantee schemes by the end of this year. the institution of the srm must proceed expeditiously, with appropriate negotiations between national and community authorities. once the mechanism is fully operational, the availability of adequate resources will allow the cost of crises to be divided between the bank ’ s shareholders, creditors and the banking system as a whole. during the transition to the srm, the risk of a vicious circle between a fiscally weak sovereign state and its fragile domestic banks persists. the esm will only be able to directly recapitalize banks – with the aim of restoring their viability and obtaining a remuneration of the capital invested – after the effective entry into operation of the ssm. there remains the possibility of using esm funds indirectly, by