for resolution regimes have been promulgated by the financial stability board. efforts are underway to implement national regimes consistent with these standards and that can work together in a coordinated way on a global basis. but more needs to be done. the impediments to an orderly cross - border resolution still need to be fully identified and dismantled. this is necessary to eliminate the so - called “ too big to fail ” problem. the basel iii capital and liquidity requirements need to be fully implemented. also, cross - border regulatory cooperation needs to be further enhanced. this includes greater exchange of confidential supervisory information so that national regulators can be fully informed about the conditions of the banks that operate within their borders. it also requires efforts to ensure a level playing field across jurisdictions so that the focus is on promoting safety and stability rather than trying to protect, favor, or shield national champions. bis central bankers ’ speeches in terms of the macroeconomy, there is both good and bad news. in the united states, the good news is that the economic outlook appears to be gradually improving. the household sector is far along in the deleveraging process, the housing sector is recovering, the banking system is healthier and credit conditions are easing, the corporate sector is highly profitable and awash in cash. monetary policy has been effective at fostering easier financial market conditions, even with short - term rates pinned at the zero bound. to provide the appropriate degree of accommodation, the federal reserve has recently moved to an outcome - based approach in which the use of our tools is explicitly tied to developments in the economy and economic outlook. currently, as part of this strategy, we are purchasing $ 85 billion of longer - term treasuries and agency mortgage - backed securities each month. after reviewing the efficacy and costs of this program, i have concluded that that efficacy has been as high or higher than i expected at the onset of the program and costs the same or lower. nevertheless, the united states could be doing better. the u. s. fiscal policy program, for example, does not appear well - calibrated to the current set of economic circumstances. we have too much fiscal restraint in the short term, and too little consolidation in the long term. the degree of fiscal restraint this year ( about 1¾ percent of gross domestic product [ gdp ] in 2013 ) is quite large relative to the forward momentum of the economy. thus, we have a tugof - war between the improving economy and the current large

good incentives and governance so that it can be broadly supported by both the core and bis central bankers ’ speeches peripheral countries. in this respect, it is important to recall that the architects of emu from the outset defined it as a project of economic and monetary union. i view the task of transitioning to a pan - european banking union with the ecb as the primary overseer of the european banking system as a critically important next step. successfully moving to a pan - european banking union would generate a large number of benefits : • it would demonstrate a commitment toward greater integration that would enhance the credibility that monetary union is indeed irreversible. • it would help to sever the link between the fiscal position of individual governments and the health of their banks. • by eliminating the scope for national bias, it would strengthen market confidence that large hidden losses are not likely to be buried within the banking system. • it would move against fragmentation and promote re - integration of the european banking system. • it would help to make monetary policy more effective in supporting activity in the peripheral countries. a critical problem in europe right now is that private borrowing costs are very low in countries like germany where the economy is operating close to full capacity, but quite high in countries like italy and spain – which are struggling in terms of economic performance. the monetary policy transmission channels in europe are impaired. banking union would make them work better. • it would underscore the fact that a euro is a euro and will remain a euro throughout europe, reducing perceptions of redenomination risk. this would make depositors less prone to move their funds from the periphery to the core and strengthen the resiliency of the system against shocks. • it would help foster greater integration of the european economy, with potentially significant macroeconomic benefits. in short, banking union has the potential to make a powerful contribution to eurozone stability and growth, both in the short term and in the long term. now, will moving to a pan - european banking system be easy? of course not. it will require a common set of standards to be applied across the whole system. this may well reveal shortcomings among particular banks and the burden is not likely to fall evenly across the european union. it will be important to identify the sources of capital that will fill any such holes in order to ensure ongoing stability and to avoid constraining the availability of credit. the process of banking union appropriately begins with a single supervisory mechanism. but, a common