risks early on and act effectively. the ssm will be in a position to provide a considerable part of what a supervisor can do for a resistant banking system. among other things, the division of tasks between national supervisors and the ecb will ensure this. but not all the developer ’ s wishes can be fulfilled or are feasible, as the resistance of the european banking system or the performance of a national credit institution don ’ t just depend on the supervisor ’ s performance and ability to act. in order to be resistant in the long term, a bank needs a sustainable business model ; it needs sufficient income in order to bear the risks associated with banking. after all, it shouldn ’ t be forgotten that the balance sheet of a bank – especially a bank with extensive corporate banking – is always a reflection of the economies in which it operates as a financial service provider. bis central bankers ’ speeches construction planning – dimensioning the building but let ’ s leave the expectations and go back to the building itself. at the beginning of every construction project is the planning. the architect has to bring the wishes and expectations of the developer into line with all kinds of existing restrictions. the final purpose of the building needs to be clearly defined. with regard to the ssm, this means that, for practical reasons, direct supervision of all institutions in the euro area was neither feasible nor wanted right from the outset. fully centralised supervision would ’ ve had the considerable disadvantages associated with an organisation being too large, the resultant burdens for all concerned – which would be considerable – and a loss of national and regional expertise concerning the specific characteristics of banks in the member states. what added value would have been brought by direct ecb supervision of the many smaller institutions, which often have regional roots? what challenges would ’ ve arisen in terms of linguistics alone? after all, without having a detailed look at a large number of credit files, it isn ’ t possible to properly supervise most of the banks which are active in private and corporate banking. national language skills are indispensable here for discussions with the executive board and employees, as well as for looking into the files. furthermore, it wouldn ’ t have been feasible to set up direct supervision of all banks in the euro area within a year. as you can see, ladies and gentlemen, when it came to the dimensions of our building, it was once again a question of striking a balance between the advantages and disadvantages of a central or decentral solution. for supervision

and every country should get involved. if european leaders focus only on domestic politics, this inward - looking attitude can only make europe weaker. a return to the previous era of globalisation without barriers is unlikely, isn ’ t it? this is indeed unlikely. and that ’ s good news, since the reason we are experiencing problems today is that globalisation didn ’ t deliver on its promises. as tommaso padoa - schioppa once said : “ those people who complain that we won ’ t get back to the pre - crisis path forget that it was the very path that led to that crisis ”. we are currently undergoing a very disorderly transition and there is a temptation to turn to nationalist ideas, when one of the great successes to emerge in the aftermath of the second world war was the creation of an international order based on trust. change is needed ; for instance, we were naive about opening up international financial flows. there was too much financial globalisation, and this led to volatility and systemic risk and it has eroded fiscal resources because multinationals have become footloose. to a certain extent, financial openness cancelled out the benefits of trade openness. we need to come up with a new international order that can overcome these problems. but returning to a system based on domestic priorities alone will clearly not work. don ’ t you think that central banks have been charged with too many roles and responsibilities? yes, i do. people expect too much from central banks, considering what we can do and the mandate they have given us in the first place. if you give a central bank too many objectives, you transform it from an apolitical entity with a narrow mandate into a political institution. we have a duty to deliver on our mandate, that is price stability. but giving us too many objectives would make us political, which we certainly don ’ t want to be. 2 / 2 bis central bankers'speeches