requirements because no one approach can fully capture the range of risks. these models include a leverage ratio, static risk - based capital rules, and a forward - looking stress test. liquidity regulation complements capital regulation by ensuring that a bank has adequate resources to meet potential outflows. liquidity can also support an orderly resolution. requiring banks to hold high - quality liquid assets that are commensurate with the size and likelihood of sudden funding outflows is a form of self - insurance against unanticipated funding shocks. while no amount of liquidity can fully guarantee that a - 4bank will survive a run, in combination with ample capital, liquidity resources can help stabilize an individual bank and limit the potential for stress to spread. 2 a third element of the prudential regulatory structure that i will describe is resolution resources, in the form of long - term debt and resolution planning. unlike the other elements of the regulatory structure that enable banks to manage through stressful times and continue operating, long - term debt requirements in the united states are intended to provide resources that can be drawn down in the resolution of a failed bank. in concert with requirements that large banks develop “ living wills, ” or strategies for orderly resolution in the event of material financial distress or failure, long - term debt provides loss - absorption resources after a bank fails, which can be used to capitalize a bridge bank, provide time for an orderly bidding process, or for the preparation for sale of the failed bank ’ s assets and liabilities. moreover, long - term debt can reduce the likelihood of a run by increasing market confidence that there will be sufficient resources for an orderly wind down. these three elements of our regulatory regime are tiered so that larger firms that pose a greater risk to financial stability are subject to stronger requirements. this tiering runs through all of our regulation and supervision and reflects the diversity of banks that support our economy. for example, a small community bank is subject only to a simple leverage capital ratio and no liquidity or resolution requirements, consistent with its small systemic footprint. on the other hand, a global systemically important bank ( g - sib ) — numerous academic studies argue that capital and liquidity requirements work together to support banking system stability ( see, for instance, hugonnier and morellec ( 2017 ), kara and ozsoy ( 2020 ), kashyap et al. ( 2024 ), van den heuvel ( 2020 ),

credibility for the ssm and has also helped to restore confidence in european banks, which was one of our key objectives. ii. flexible branches to adapt to future challenges 1 / 3 bis - central bankers'speeches with its values and roots, the ssm tree has been able to produce flexible and agile branches, enabling it to adapt to crises and anticipate future transformations. the ssm has stood firm : it has weathered the storms without breaking. in my view, we now have the means and the need to moving towards more risk and cost sensitive supervision. in our view, equal treatment does not mean homogenization of risk analyses, on the contrary. the better we understand the risks specific to an institution and the context in which it operates, the better we are able to apply the right supervisory tools. the challenges we face today are manifold : digital, technological, climatic. we thus need to ensure that we develop further our effectiveness, efficiency and agility enough to meet the challenges ahead. as illustrated in the discussions this afternoon, the ssm has already taken important steps to that end. iii. ssm teams : the lifeblood of the ssm tree and i have no doubt that we will be able to meet those challenges together. indeed, here lies the key to our success so far, and for the future : our ability to act collectively. the ssm's strength lies in having worked from the onset to create what we have called the " one team spirit " by uniting the teams and in fostering quality dialogues and interactions with the supervised entities. i would therefore like to take this opportunity to extend my warmest thanks to the men and women who work on a daily basis within the ssm. to continue the metaphor, they are the lifeblood, the sap of our common tree : the success of european supervision is largely attributable to them. here, i would like to pay special tribute to ssm teams for their work. they can be proud of their achievements, their professionalism and the expertise they have developed, which has become a very valuable common base of knowledge. it is therefore important for us to unite this great team even more. this is the whole purpose of the ssm integration project led by edouard fernandez - bollo. i have been very supportive of this initiative, which has already brought the teams closer together and nurtured their sense of belonging to the ssm. as i said earlier, the ssm also functions thanks to the good relations