many of whom had experience during the years of the internet boom. the interviews emphasized that providers of payment services cannot assume that an innovative service will generate significant demand simply because it provides new and creative technical capabilities. providing net benefits to one or more key participants in a transaction, while not materially affecting other participants negatively, appears to be the most important requirement for any innovation to be successful. the benefits may accrue to the providers of payment services in the form of lower costs, but they cannot adversely affect end users. this interaction between the preferences of payments users and the choices offered by payments providers determines which payment instruments will become successful in the long run. successful electronic payment instruments, by their very nature, require large networks with wide reach. that is, the instruments require a critical mass of both payers and payees. developing large networks and attaining critical mass, however, are often difficult tasks. consumers may be cautious about using new payment methods and will have particular concerns about how providers protect users ’ funds, security, and privacy. in complex payment systems, users may need a significant amount of time to become familiar with and learn to trust a new system. moreover, potential providers of new payment services may be cautious about investing before they understand how many consumers would want to use a new payment instrument or system. as a result, innovators face the classic “ chicken and egg ” problem when assessing the network economics of establishing new systems. in the late 1990s, attempts to establish large - scale stored - value card networks in the united states faced these problems and were ultimately not successful. however, the likelihood of overcoming these network problems appears to be higher if a particular innovation meets a significant need that existing instruments do not. for example, the growth of internet commerce created a new need for a payment method that would allow both consumers and businesses to make and receive relatively low - value electronic payments. while credit cards and debit cards have become the primary means of conducting these transactions, a segment of the market, specifically individuals and small businesses, could not readily accept card payments from others. this demand for an alternative way to make payments on the internet eventually led to the development of new payment options, such as paypal. the economics of networks and of scale may also interact and accelerate change in traditional systems. for example, the clearing system for paper checks includes a high - fixed - cost physical transportation system. declines in check volumes generally, as well as declines in the collection of checks in paper form,

rules to create a level playing field for all the financial institutions of the eu ( some 8, 300 banks across the eu ), also known as the single rulebook, comprising secondary law ( directives, regulations, decisions ), regulatory and implementing technical standards drafted by the european supervisory authorities ( esas ) and soft - law rules such as guidelines and recommendations. the single rulebook applies to all 28 eu member states and marks a shift from the previously predominant regulatory philosophy of minimum harmonization of national rules and the provision of a european passport based on mutual recognition across the eu to maximum harmonization. three of the most important single - rulebook pieces are directly related to banking. these are the capital requirements directive iv ( crd iv ) and the capital requirements regulation ( crr ), the bank recovery and resolution directive ( brrd ) and the deposit guarantee scheme directive ( dgsd ), which lay down capital requirements for banks and create regulation to the prevention and management bank failures, including a minimum level of protection for depositors. to this end, along with the major regulatory change in the banking sector, there was swift progress towards institutional change with the creation of the banking union ( bu ) : pan - european centralised bodies for the supervision and resolution of banks, indispensable to ensure financial stability in the euro area. the creation of the banking union comprises three pillars based on the single rulebook as the foundation ( see figure 10 below ) : a single supervisory mechanism ( ssm ), a single resolution mechanism ( comprising a single resolution board and a single resolution fund ) and a common deposit insurance scheme ( yet to be approved ). 14 / 17 bis central bankers'speeches under the first pillar, the single supervisory mechanism ( ssm ) was established without treaty change. by unanimous vote the council decided to confer “ specific tasks concerning policies relating to the prudential supervision of credit institutions ” on the european central bank, in accordance with article 127 ( 6 ) of the treaty on the functioning of the european union ( tfeu ). but a treaty change in the future should not be ruled out. the european central bank now directly supervises 123 systemically significant banks and, at the same time, national supervisors work closely together within an pan - european supervisory system to supervise the so - called “ less significant institutions ” ( around 5, 500 ) in the 19 member states of the euro area. a single resolution mechanism ( srm ) is the necessary complement of the first pillar