outs by national governments, because it would become more common to resolve banks rather than save them. hence, the private sector would bear the cost rather than the taxpayer. any residual fiscal burden on sovereigns would be contained through a federal fiscal backstop. the shift of supervision from the domestic to the european level, at which supranational interests are pursued, should also eliminate national bias and the associated supervisory forbearance that the financial crisis has brought to the fore. with hindsight, in the past supervisors were often lenient towards “ national champions ”, constrained either by their mandates or by other national pressures, or perhaps both. supervisors should be free from local pressures and interests ; they should be able to independently assess the situation of individual banks in a systemic context. from a monetary policy perspective, the banking union can relieve monetary policy of some of the tasks undertaken during this crisis, notably that of repairing and bypassing a clogged bis central bankers ’ speeches transmission channel. early supervisory action limits the necessity to access central banks ’ financing, including non - standard measures. reasons and benefits for entrusting the ecb with the ssm all of these reasons were the driving forces behind the establishment of the ssm. let me now spend a moment on the reasons why the ecb is being entrusted with these centralised supervisory tasks. first of all, there are legal reasons. given the need to establish the ssm quickly, a treaty change, which would take several years, was not really an option. article 127 ( 6 ) of the treaty on the functioning of the european union provides that the council by unanimous vote may “ confer specific tasks upon the european central bank concerning policies relating to the prudential supervision of credit institutions. ” but a treaty change in the future should not be ruled out. second, the decision was guided by practical reasons. over the years, the ecb has built up a unique expertise in analysing financial institutions and markets. in other words, the ecb has the means and, in conjunction with the national authorities, in most cases coinciding with the national central banks, the technical capability to carry out this complex task. moreover, most of the national central banks already have prudential competence. key principles for the implementation of the ssm let me now describe how the ssm will function. one of the conditions for the success of the ssm is that it ensures a truly european perspective. it is a myth that politically protected

”, comparable in many ways with that of creating a new currency and a new central bank before the start of this century. the ecb is keenly aware of this and consequently puts an enormous focus on the careful, yet efficient, execution of the preparatory work, drawing on all available sources of expertise, both internal and external. however, as the preliminary agreement between the european parliament, the commission and the council from 19 march is now being renegotiated further to a new request, a delay in the final adoption of the ssm regulation cannot be excluded. this would constitute a risk to the timely start of the ssm ’ s operations in mid - 2014 and generate legal uncertainty. a policy of procrastination, however, would send the wrong signals. both the ssm and the srm are elementary building blocks for the reintegration of europe ’ s banking landscape. so they must be implemented swiftly and decisively. bis central bankers ’ speeches