these mechanisms must be robust, with sufficient financial resources and designed to respond quickly and effectively, while at the same time promoting accountability and avoiding moral hazard. the more robust and credible these " backstops " are, the less likely they are to be used for real. to address this concern, the first temporary european mechanisms were established in may 2010 : the european financial stability facility ( efsf ) and the european financial stabilisation mechanism ( efsm ). replacing these was the european stability mechanism ( esm ), created in 2012, now a permanent facility. this mechanism is an indispensable complement to the reforms mentioned above and an important milestone in the profound transformation under way in the euro area. as robert schumann stated in 1950 : “ europe will not be made all at once, or according to a single plan. it will be built through concrete achievements which first create a de facto solidarity. ” final observations i would like to conclude, answering the question put to this panel ( “ what is the future of the euro? ” ) on a confident note. i am convinced that the euro area will not only survive this crisis but also will emerge stronger and more united than before. europe has faced difficult crises in the past, while not of this magnitude, which were ultimately overcome and led to the bolstering of european integration. i believe that this time will be no different. the european project is still a work in progress and, as we have seen, has flaws in its foundations. we cannot miss this unique opportunity to strengthen these foundations, through profound reform that is key to increasing stability and resilience in the euro area, completing the single market and strengthening the european union ’ s international role. coherent economic policy, sound, effective and accountable institutions and greater solidarity are crucial for europe to overcome the crisis and restore sustainable growth and employment. we should ensure that the european union is a “ positive sum game ”, in which everyone benefits and where the distribution of gains between countries is balanced. as an integral part of the whole that is the european union, the euro will prevail as the common currency for a group of countries that share a single monetary policy ; that will establish banking union ; and that will operate within a coherent and binding framework of rules and under institutions that ensure compliance with those rules. the future of the euro area will involve greater sharing of sovereignty, with increased legitimacy, accountability and solidarity, in which european institutions are increasingly answerable for the “ whole ” and

at subsidiary level ( host ) are addressed ; and the choice between subsidiaries or branches, together with the supervisory powers of host national competent authorities ( ncas ). in this context, the transformation of subsidiaries into branches has emerged as an answer to the host responsibility for covered deposits – however that implies, at least, when local undertakings are of systemic relevance to the concerned member state, that : domestic supervisors should have a say in the day - to - day supervision and should have the capacity to react to strategic decisions affecting branches as they would have had 1 / 2 bis central bankers'speeches had it been a standalone entity ; national resolution authorities are adequately involved and empowered in the definition of resolution plans and in the resolution action when it occurs. 2. second, solutions need to be found for the orderly exit of traditional medium - sized deposittaking banks without disrupting financial stability. whereas mrel and bail - in requirements may work for larger banks, there may be no clear room for a ‘ middle class ’ of institutions whose business model may be incompatible with mrel requirements ; institutions that may be of no public interest at eu level but still have systemic relevance at local level. instead of moving immediately towards a further straitjacketing of member states ’ room for manoeuvre with the harmonisation of eu banks ’ liquidation regimes, efforts must be made towards the establishment of an enabling framework for the “ orderly ” winding - down of locally systemic relevant banks, combining elements of the resolution and liquidation frameworks, while preserving value and protecting creditors and non - financial borrowers. possible paths to be explored might include : the establishment of special insolvency proceedings, with recourse to administrative options, attributing some of the instruments currently envisaged in the brrd for banks in resolution to a liquidating authority, as an alternative to the ‘ atomistic ’ court - led liquidation regime. ( the liquidating authority and the funding sources available would need to be identified. ) ensure effective financing of the deposit insurance systems for deposit transfers abiding by the least cost principle with the liquidating authority having the option to offer guarantees or enter into profit and loss sharing regimes. ( for that, a revision of the applicable state aid rules would be required. ) recent calls to form a sort of european fdic, merging the single resolution fund and edis into one single entity, merit our attention in this regard in the medium - term, provided that the legal framework is fixed and that financial stability