jorg asmussen : towards a banking union – the state of play from the ecb ’ s perspective speech by mr jorg asmussen, member of the executive board of the european central bank, at the handelsblatt conference “ banken im umbruch ”, frankfurt, 4 september 2013. * * * ladies and gentleman, we are about to embark on one of the most decisive changes in the history of the european single currency. i expect that the european parliament will approve the legislative proposal for a single supervisory mechanism next week, bringing the effective start of banking supervision at the european level in autumn 2014 into sight. the relative calm in the financial markets that has now prevailed for over a year must not mask the huge significance of this project. only a sound banking sector in europe can ensure an ample supply of credit to enterprises and households. but it would be wrong to believe that the recovery of the banking sector will solely depend on the transfer of banking supervision to the ecb. the single supervisory mechanism is a necessary step towards restoring the health of the banking sector, but it is not sufficient in itself ; the need for reform and action in other policy areas has not abated. nonetheless, the single supervisory mechanism is an essential component of a genuinely european banking union. a european banking union in all its aspects forms the prerequisite for a truly integrated european financial market. who will benefit? first, banks, because they will in future be subject to a single regulatory and supervisory framework ; second, borrowers, because they will once again be assessed by their creditworthiness rather than by their location ; third, taxpayers, because they will no longer be first in line to pick up the bill in the event of bank failures. all of this will help to restore confidence in the banking sector. banks will be able to resume their core business, supplying credit to the real economy, offering secure savings accounts and making sure that payments are conducted safely. especially at this formative stage, we must now lay proper foundations to enable the banking union to fulfil these high expectations. we want a banking union that will be resilient to future crises and will ideally prevent them from arising in the first place. given the at times differing national interests, the project will not sell itself. so we are seriously committed to the preparatory work. today i would like to review the state of play and take a look ahead to the single supervisory mechanism, presenting my view of what still needs to be fine - tuned

march 2013 ecb staff macroeconomic projections for the euro area foresee annual hicp inflation in a range between 1. 2 % and 2. 0 % in 2013 and between 0. 6 % and 2. 0 % in 2014. in comparison with the december 2012 eurosystem staff macroeconomic projections, the ranges are broadly unchanged. in the governing council ’ s assessment, risks to the outlook for price developments continue to be seen as broadly balanced over the medium term, with upside risks relating to stronger than expected increases in administered prices and indirect taxes, as well as higher oil prices, and downside risks stemming from weaker economic activity. turning to the monetary analysis, monetary figures for january 2013 support our assessment that the underlying pace of monetary expansion continues to be subdued. the annual growth rate of m3 remained broadly unchanged at 3. 5 % in january, after 3. 4 % in december 2012. the annual rate of growth of the narrow monetary aggregate, m1, increased to 6. 7 % from 6. 3 % in december 2012. the deposit base of mfis in a number of stressed countries strengthened further in january. the annual growth rate of loans ( adjusted for loan sales and securitisation ) to non - financial corporations stood at – 1. 5 % in january, after – 1. 3 % in december 2012. the annual growth in mfi loans to households moderated slightly to 0. 5 %, from 0. 7 % in december. to a large extent, subdued loan dynamics reflect the current stage of the business cycle, heightened credit risk and the ongoing adjustment of financial and non - financial sector balance sheets. at the same time, available information on the access to financing of non - financial corporates indicates tight credit conditions for small and medium - sized enterprises. in order to ensure adequate transmission of monetary policy to the financing conditions in euro area countries, it is essential to continue reducing fragmentation of euro area credit markets and strengthening the resilience of banks where needed. decisive steps for establishing an integrated financial framework will help to accomplish this objective. the future single supervisory mechanism ( ssm ) is one of the main building blocks, together with a single resolution mechanism ( srm ). both are crucial elements for moving towards reintegrating the banking system. to sum up, the economic analysis indicates that price developments should remain in line with price stability over the medium term. a cross - check with the signals from the monetary analysis confirms this picture. while the accommodative