unified risk - assessments of each cross - border banking group. finally, it should also oversee the activities and risks of these banking groups. ” “ to achieve these tasks, there is a need for a separate agency, staffed with a sufficient number of competent employees. initially, these employees could of course be recruited from the existing national supervisors. also the staff of the eofs would have to cooperate with the national supervisors. ” governor stefan ingves : cross - border banking regulation – a way forward : the european case, 16 / 10 / 2006, federal reserve bank of chicago, conference on international financial instability : cross - border banking and national regulation. bis central bankers ’ speeches at the moment, after eight years and severe crises, we are taking steps pretty much towards the direction proposed by stefan. however, he also mentioned that the authority should be independent and not the ecb or the european commission, but as we know according to the current eu - treaties this was not a feasible option. the european union is now taking a significant step forward by establishing the single supervisory mechanism for the euro area and the non - euro area member states have a possibility to join in the form of “ close co - operation ”. therefore, it may be fair to ask whether we someday see sweden to join the single supervisory mechanism. banking union as part of the economic and monetary union and as a remedy for the crisis, the eu leaders agreed in june 2012 on creating a true banking union. the single rulebook provides a foundation for the banking union. it is based on the idea of identical regulatory requirements, such as capital adequacy rules for banks. these are achieved through european legislation and lower - level technical standards. one of the main pillars of the banking union is the single supervisory mechanism. i will come back to the recent developments in its construction later on. another important pillar is the single resolution mechanism. as you know, intensive talks in the form of eu trilogue ended in march and european parliament approved the srm regulation in april. in addition, deposit insurance schemes will be strengthened and harmonised as part of the banking union in the long run. the banking union may also be complemented by structural reforms. the european commission has made a legislative proposal based on the liikanen report and it will be finalised under the term of the next european parliament. in the future, the banking union, when properly implemented, will help us resolve banking problems while avoiding using taxpayers ’ money for bail - outs.

exercise at the national level, benefitting from local knowledge, but following common data requirements and methodology. as an example of the extensive methodology, the asset quality review phase 2 manual was published in march. the manual provides specific guidelines for all involved parties on the conduct of relevant steps of the exercise. the comprehensive assessment is indeed comprehensive. first we do a risk assessment addressing key risks in the banks ’ balance sheets, including liquidity, leverage and funding. after that an asset quality review is carried out examining banks ’ balance sheets based on information at the end of 2013. and finally, a stress test, done in collaboration with the eba, complements the asset quality review by providing a forward - looking view of banks ’ riskabsorption capacity under stress. the asset quality review has progressed and some details of its coverage have been released. approximately 135 000 loan books will be examined by the authorities. the loan file review covers both corporate and retail portfolios. it covers total banking book riskweighted assets ( rwa ) of approximately € 3. 7 trillion, representing 58 % of total credit riskweighted assets across the banks subject to the assessment. in addition, 29 banks with material trading book exposures are subject to a specifically tailored aqr of the trading book. the structure of the comprehensive assessment also clarifies the frequently asked question, how this assessment differs from previously conducted eu level stress tests? the key differences to my mind are as follows : • banks ’ risks and asset quality are assessed in a comprehensive manner at the banking union level. assessments are made applying common definitions, abolishing – or at least showing explicitly – any diverging national interpretations. • sufficient corrective measures can be guaranteed as the ecb in its supervisory role will have all the necessary supervisory powers. • quality of assessments is ensured not only by the ecb ’ s strict procedure for ongoing quality assurance, but also by the involvement of third party evaluators. the results of the assessment will be published in a single disclosure, including all three parts of the exercise. the results of the comprehensive assessment will be followed by corrective measures where necessary. the ecb published last week more details on how banks ’ should cover bis central bankers ’ speeches possible capital shortfalls. capital shortfalls will be expected to be covered within six months for those identified in the aqr or the baseline stress test scenario, and within nine months for those identified in the adverse stress test scenario. recapitalisation measures to