rulebook. this implies also lower costs for the bank in complying with regulatory requirements. common rules and methods of supervision have a broader impact on competition among banks. banks are treated equally in supervision and regulatory capture can be avoided, thereby ensuring a level playing field. bis central bankers ’ speeches the single resolution mechanism ( srm ) the second important pillar of the banking union is the single resolution mechanism ( srm ), which is a necessary complement to the single supervisory mechanism. single resolution mechanism creates a single authority, which is responsible for swift and orderly resolution of banks in the euro area and participating member states. the srm is a game - changer in the european bank resolution, as it is designed to end bank bail - outs. the new bank recovery and resolution framework ensures a uniform european approach where identical cases are treated identically. the single resolution mechanism is complemented by the single resolution fund ( srf ) which is financed via levies on the banking sector itself. the fund ( eur 55 bn ) starts from national compartments but it will gradually, in eight years, be mutualised to become a single european fund. underlying the new regime is the bank recovery and resolution directive ( brrd ) which changes the culture in the banking markets. bail - in will now be the rule, bail - out a rare exception. as of the beginning of 2016, the brrd requires bail - in of shareholders and creditors equal to at least 8 % of the total liabilities of a failing bank. only after the threshold of 8 % bailin can money from the resolution fund be used and only at the very end of the process can public money be used. it is notable that public money can only be used to facilitate resolution, not to save non - viable banks. macroprudential policy alongside the changes in microprudential supervision due to the establishment of the ssm also a macroprudential policy is becoming effective. while the macroprudential policy lies in the first place with the national authorities, the ssm regulation assigns macroprudential tasks also to the ecb. in particular, the ecb may decide stricter measures than national authorities, using the counter - cyclical buffer or other macroprudential tools provided with the european legislation. the role of the ecb in making macroprudential decisions within the banking union can be seen as a useful complement to national frameworks so as to avoid the so called inaction bias in macroprudential policy

targeted instruments, but politically sensitive and in public interest. therefore, decision making of those instruments should remain at the national level. in a very integrated market there are, however, many ways to circumvent policy actions. thus, reciprocity is of essence. making reciprocity effective requires that tools available in different eu - countries are sufficiently standardized. preferably, borrower based tools should be introduced into european legislation because that would ensure the availability of those instruments in each jurisdiction. at a minimum, i would see benefits in some level of eu - wide harmonization. this would be needed already for level playing field reasons, for enabling cross - country comparisons and reciprocation. our challenge in applying capital - based macroprudential instruments is how to achieve a correct impact and in time. swift, straightforward decision making process is one precondition for successful macroprudential policy going forward. however, the conduct of macroprudential policy doesn ’ t require only a good timing but also a careful consideration of interplay with other economic policies. as it has been pointed out in many occasions – like the imf seminar “ rethinking macropolicy iii ; progress or confusion? ” – we may not know exactly how to best use macroprudential instruments, but we know that we are on the right track. " to sum up. i called for some flexibility, as systemic risks and banking structures differ from one country to another. macroprudential policy framework was created in a way that would mitigate inherent inaction bias in unpopular decisions. legislation could be developed further into that direction, as we need more actions and less “ talking to the wind ”. we in finland have national, ssm, eu and nordic links and procedures in place. every measure to simplify processes and to diminish bureaucracy would be more than welcome. 2 / 2 bis central bankers'speeches