ever greater size should be reduced. systemic risk buffers and higher capital requirements for systemically important institutions are instruments which counter this incentive. their introduction is therefore welcome. in other words, there should be at least three, not just two, taxis waiting at the taxi ranks of large stations, to return to the image i used earlier. however, capital buffers are only a first line of defence to help banks weather adversity better. this is particularly important for banks that would be especially difficult to wind up. further measures are necessary to ensure that it is, in extremis, possible for large and very interconnected banks, too, to fail. 6. banking union 6. 1 single resolution mechanism a vital building block in the process of making the banking system more stable is creating the regulatory framework for the orderly resolution of failed banks. to achieve this aim, procedures need to be put in place which allow the principle of liability to be implemented effectively. the eu has made crucial progress recently, with the adoption of a harmonised bank resolution regime ( the bank recovery and resolution directive ) and the decision to create a single resolution mechanism ( srm ). essentially, the new rules are designed to ensure that banks that run into difficulties in future can be wound up, with their owners and creditors being first in line to foot the bill. the srm provides expressly for a bank - financed resolution fund only being second in line, while public funds would only be used as a last resort. despite a number of exceptions in the bis central bankers ’ speeches fine print, which are part and parcel of the process of compromise, the resolution mechanism agreed upon allows a fundamental principle of market economics to be enforced. the bundesbank welcomes this agreement as an important complement to common european supervision. but we still believe that a treaty change will be needed, all the more so as the decision - making processes seem to be as complex as ever. the aim must be to set up a european resolution agency equipped with clear decision - making structures. a matter which has yet to be decided conclusively, but one that will be of particular interest to you, is the question of which banks will need to pay into the single resolution fund, and how much. an appropriate approach would be to have different contributions depending on an institution ’ s size and its specific risk profile. banks will be asked to bring the fund up to its target volume of 55 billion euro over a period of eight years, beginning in the year

monetary policy, we will be guided by the committee ’ s new goals and strategy statement. it will be important to provide the requisite accommodation to achieve maximum employment and average inflation of 2 percent over time, following persistent underperformance. while the committee did not anticipate the unprecedented challenge of the covid - 19 pandemic when the review was launched, the new statement puts us in a stronger position to support a full and timely recovery. 21 i would like to express appreciation for the leadership of the review by chair powell and vice chair clarida, the important contribution of president williams, and the excellent and indispensable contribution of ellen meade of the federal reserve board. our deliberations were greatly enriched by engagement with community members through fed listens events in every district of the country. committee deliberations were informed by 13 excellent staff memos — expertly overseen by thomas laubach of the federal reserve board, with the support of jeff fuhrer of the federal reserve bank of boston, marc giannoni of the federal reserve bank of dallas, and david altig of the federal reserve bank of atlanta — as well as 7 outstanding papers and responses by leading outside experts. for more information on the staff memos, including a reference list with links to each one, see david altig, jeff fuhrer, marc p. giannoni, and thomas laubach ( 2020 ), “ the federal reserve ’ s review of its monetary policy framework : a roadmap, ” feds notes ( washington : board of governors of the federal reserve system, august 27 ), https : / / www. federalreserve. gov / econres / notes / feds - notes / the - federal - reserves - review - of - its - monetarypolicy - framework - a - roadmap - 20200827. htm. the papers by outside experts are available on the federal reserve bank of chicago ’ s website at https : / / www. chicagofed. org / events / 2019 / fed - listens - conference - onmonetary - policy.