legislation and lower - level provisions, such as binding standards developed by the european banking authority. the rulebook leaves, however, some leeway for national authorities to impose stricter requirements at the national level for macroprudential reasons, such as containing real - estate bubbles. the greatest progress has been achieved in the field of the single supervisory mechanism. in november, an eu regulation came into effect assigning supervisory competencies to the dirk schoenmaker ( 2011 ) “ the financial trilemma ”, economics letters 111, 57 – 59. bis central bankers ’ speeches european central bank ( ecb ). when the ecb will assume its supervisory tasks next year, it will have two clearly separated functions – monetary policy and banking supervision. another important pillar of the banking union is the single resolution mechanism. as you know, intensive talks have been going on among member states on this field. in addition, deposit insurance schemes will be strengthened and harmonised as part of the banking union. in the future, the banking union, when properly implemented, will help us avoid using taxpayers ’ money for bank bail - outs. the banking union may also be complemented by structural reforms, as suggested by the high - level expert group on reforming the eu banking sector. 2 the european commission is currently finalising its stance on the issue, and further proposals are expected in the near future. preparations for single supervisory mechanism today, i would like to focus on the status of preparations for the single supervisory mechanism ( ssm ). the eu regulation assigning supervisory tasks to the ecb became effective in early november. already well ahead of this time, the ecb and national supervisors started practical preparations to ensure timely adoption of supervisory responsibilities by the ssm. as a concrete step, the ecb governing council nominated ms daniele nouy, the current secretary general of the acpr, the french supervisory authority, for chair of the supervisory board of the new single supervisory mechanism. her nomination was confirmed yesterday by the european parliament. a broader recruitment process for supervisory management positions has also been launched by the ecb. the supervisory board of the ssm is now about to start its activities as soon as possible, most likely early next year. before the ecb assumes its supervisory responsibilities, there is an on - going transition period, during which a comprehensive assessment of significant banks is carried out. during the same period other preparations for the ssm are to be completed. before the assumption of the ssm supervisory role, the

approach is particularly appropriate in the current world of significant uncertainties, which requires a steady but creative hand from the makers of monetary policy. from this point of departure, today, let me focus on the challenges of monetary policy normalisation and framework over the medium term. the ecb monetary policy and gradualism slide 2. euro area gdp in 2008 - 2020 1 / 6 bis central bankers'speeches despite some moderation following the strong growth performance in 2017, the euro area economy continues to expand at a rate estimated to be higher than its long - run potential growth rate. there has been good progress in the labour market, and over 9 million jobs have been created during the recovery since 2013. the underlying strength of the economy should support the convergence of inflation to our price stability target. despite the anticipated winding - down of the eurosystem ’ s net asset purchases, the monetary policy stance of the european central bank remains very accommodative, which is still needed to support achieving our price stability target in a sustained manner over the medium term. in this, in many ways benign situation, monetary policy makers are bound to take decisions in the world of uncertainties. today ’ s concrete uncertainties stem from the continued trade tensions, vulnerabilities in the emerging market economies and financial market volatility. they are amplified by analytical uncertainties related to the functioning of the economy and the operation of economic theories, which we use daily in formulating our policies. these uncertainties are related to e. g. the prospect of secular stagnation, the assessment of the natural rate of interest, and the slope and movements of the phillips curve. we will hear michaela schmoller ’ s presentation about the issue of secular stagnation shortly. 1 a corollary from these factors is the additional question : what is the impact of these uncertainties on central banks ’ strategies? after a decade of exceptional measures, prospects for returning to a more conventional interest rate environment and a more normal eurosystem balance sheet have slowly strengthened. a watchword in the discussion on normalisation is gradualism. gradualism has been defined as the central bank tending to adjust the interest rates ( and, in the present context, its other instruments ) incrementally, in a series of gradual steps in the same direction. theoretically, this cautious approach can be justified by william brainard ’ s classic 1967 argument, which showed that gradualism is warranted when there is uncertainty about how the economy