economic and monetary union. to do so, we must be willing to accept meaningful changes to the institutional framework. as i have said in the past, a good starting point would be to assign powers to a european finance minister. in keeping with the spirit of the maastricht treaty, the finance minister could coordinate national economic policies in a different way. he or she could ensure that national fiscal policy is conducted with a view to contributing to the achievement of the eu ’ s objectives. the trouble for politicians is that voters may feel that granting greater scope at the eu level means taking away from national interests. but then there are the 70 years of peace ; there ’ s free movement across nearly an entire continent ; and there ’ s the world ’ s second largest economy. all this shows us that what we sometimes feel may be taking away our national sovereignty is in fact adding meaningful value to our lives. and this is why we should take more time to reflect on the achievements of the past. what ’ s more, politicians are not the only ones with a role to play. european unity starts with each individual ; it starts with you. you can each reflect on how you could promote europe as citizens, as students and as future leaders. the eu ’ s crisis response and the banking union dear students, having asked you to reflect on your role within the union, it is only fair to tell you about how i do my part. a large portion of my professional life since 2012 has been devoted to the creation of the european banking union. to understand how the banking union came about, we have to go back to the financial crisis. in the eu, it began as a crisis of the banking system and turned quickly from a financial crisis into the great recession. and many of the troubled banks held large amounts of their own governments ’ debt. this, together with the fact that some countries were already highly indebted, created a vicious circle. and so the sovereign debt crisis emerged. in june 2012, european leaders announced their intention to create a european banking union. but you may ask : why would a union change things? well, for a number of reasons. first, if we want to foster a healthy european banking market that can also serve the real economy in a downturn, we should make sure banks are all subject to the same rules. and to the same unbiased, intrusive supervision and resolution practices. in 2009, the eu had already started working on common rules for the banking

spirals in fixed income markets during the covid - 19 crisis ”, bis bulletin, no 2, bank for international settlements, 2 april. [ 9 ] vivar, l. m. et al. ( 2020 ), “ burned by leverage? flows and fragility in bond mutual funds ”, working paper series, no 2413, ecb, may. [ 10 ] vassallo, d. et al. ( 2020 ), “ volatility - targeting strategies and the market sell - off ”, financial stability review, ecb, may. [ 11 ] according to ecb simulations, assets worth nearly 225 % of the portfolio ’ s capital had to be sold in order to meet the volatility target. the simulation assumes a leveraged investor with a diversified portfolio including equities, corporate and government bonds. in this stylised model, relative portfolio weights are adjusted on a daily basis to equalise the risk contributions of the constituent assets of the portfolio considering the daily estimates of portfolio variances and covariances. the level of leverage is set in a way to bring the expected portfolio volatility in line with the volatility target. for more details, see vassallo, d. et al., op. cit. [ 12 ] the liquidity effects of initial margins are likely to increase further in the future. today, around two - thirds of non - banks ’ derivative exposures are not centrally cleared. initial margin requirements remained fairly stable for these contracts during the turmoil. however, as the implementation and application of the over - the - counter derivatives reform progresses, an increasing number of contracts will be moved to central clearing and an increasing number of non - centrally cleared contracts will become subject to initial margin payments. see also fache rousova, l. et al. ( 2020 ), “ derivatives - related liquidity risk facing investment funds ”, financial stability review, ecb, may. [ 13 ] surveys confirm that variation margin calls led to strained liquidity situations for some non - banks. see the results of the june 2020 survey on credit terms and conditions in euro - denominated securities financing and over - the - counter derivatives markets ( sesfod ). [ 14 ] ecb ( 2020 ), financial stability review, november, forthcoming. [ 15 ] schrimpf, a. et al., op. cit. ; duffie, d., op. cit. ; liang,