out in a consultation paper proposing simplifications to liquidity, reporting, and disclosure requirements for banks and building societies that are eligible for the simpler regime. [ 21 ] in addition, we are also publishing a consultation paper proposing simplifications to remuneration rules for smaller firms. these are changes we could not have made whilst we were in the eu. they are a down - payment on our commitment to use our new powers to tailor rules and to make the uk a better place to operate a financial firm, without compromising on safety. we plan more. we are looking more broadly at the whole structure of rules around remuneration and we are committed to publishing proposals to simplify capital requirements for the simpler regime. ideas for how we can simplify rules for larger mid - tier firms are under development. on that subject, i want to draw attention to analysis we have published today about the impacts of the basel 3. 1 proposals we are consulting on and of some earlier reforms. [ 23 ] the analysis shows how these will together help to narrow the gap between capital requirements for mortgages under the standardised approach used by the majority of smaller banks and the internal ratings based ( irb ) approach used by bigger banks. this analysis shows how we are already levelling the playing field to facilitate effective competition between small and large banks. in this case, our analysis shows why we expect the gap between capital required for mortgages under the standardised approach and capital required under irb to narrow significantly. [ 24 ] these findings will inform our approach to simpler regime capital requirements for small firms. deepening our understanding as we continue our work, we must continue to draw on global best practice when pursuing our new objective. until now, the contribution of prudential regulation to international competitiveness and growth has not been a focus of research in academia or the regulatory and central banking community. more research and debate with practitioners, academics and regulators will help us deliver our new objective and will help us understand how to measure and report on how well we are doing. this is why i am delighted to announce that we will be holding an international conference on 19 september to deepen our understanding of the links between prudential regulation, international competitiveness, and growth. i hope that the conference, which will be held after the financial services and markets bill is expected to be enacted, will kick off the next stage of a debate about how we can pursue our new objective. we would also like to share

, resolution costs will have to be borne first by shareholders and creditors. after that, a bank - financed resolution fund will come into play, and only as a last resort are public funds to be used and the taxpayer made to pay. and there is even more to do before the banking union starts. one of the biggest preparatory steps is undoubtedly the comprehensive assessment of those banks which will fall under european supervision. this comprehensive assessment consists of two elements : a backward - looking asset quality review and a forward - looking stress test. the objective of the asset quality review is to uncover legacy assets in banks ’ balance sheets that were accumulated while the banks were under national supervision. the objective of the stress test is to assess how resilient banks are to stress scenarios. any capital shortfalls revealed by the comprehensive assessment have to be rectified before the banking union starts. ideally, this would primarily involve private funds. if private funds should not be available and the bank has a sustainable business model, the respective government could step in. ultimately, it is a question of who is responsible for past failings in banking supervision – and that is the individual member states. the comprehensive assessment will allow the banking union to start with a clean slate. at the same time, it will support the necessary deleveraging of european banks. balance sheets will eventually be “ cleaned up ” and any doubts regarding their quality will be removed. this will improve banks ’ capacity to lend to the real economy and thus support economic growth. against this backdrop, it is crucial that the comprehensive assessment is conducted in a tough and thorough manner. nevertheless, to ensure that the real economy is properly financed we might have to consider additional options. an important step would be to revive the market for securitisation. looking at europe, this is of particular importance as corporate funding in europe is much more dependent on bank credit than in the us. meanwhile, european asset backed securities ( abs ) had a much better track - record during the crisis than their us counterparts : according to a recent study by the ecb and the bank of england, the default rate for european abs from mid - 2007 to the third quarter of 2013 was 1. 5 %. this compares to 18. 4 % in the us. it is crucial to make securitised products attractive to investors without exerting negative effects on financial stability. 6. conclusion ladies and gentlemen, i have covered a lot of ground in my speech today. nonetheless, the central message is straightforward