capital across its business lines, in addition to pooling its risks across the banking group. a branch can rely on the capital of the parent bank to borrow from the interbank market for funding purposes. this may not be possible for a local subsidiary with a smaller capital base. a branch structure can also give the banking group a greater ability to withstand idiosyncratic shocks to part of the group, because excess liquidity and capital from one part of the group can be redeployed to the parts in need. this, of course, is provided that the shock is not so large as to overwhelm the group as whole. bis central bankers ’ speeches during periods of severe stress, however, the close linkages between business functions in a single, integrated entity make it difficult to isolate and contain problems. the provision of essential services by a branch such as domestic lending and deposit - taking, as well as payment transactions, could be disrupted. local depositors would be exposed to possible contagion or a crisis of confidence arising from problems in the bank ’ s home market, or from problems related to its wholesale banking activities. mas imposes a number of regulatory requirements on the locally - incorporated banks to protect depositors, including the higher capital adequacy requirements that i mentioned earlier and a minimum paid - up capital of $ 1. 5 billion. however, there are qualified full banks ( qfbs ) and foreign full banks which operate as branches and accept retail deposits without any capital in singapore. mas ’ approach has been to closely supervise these branches. they are also required to be members of the deposit insurance scheme, which provides a safety net for all non - bank depositors by insuring their deposits up to $ 50, 000 per depositor per bank. there are clear benefits, however, for foreign banks with a large retail presence to operate their retail business from a locally - incorporated subsidiary. where the banks have corporate or investment banking businesses, these activities can continue to operate as part of their existing branches. this will allow banks to continue to benefit from cost efficiencies associated with a branch structure and minimise changes to their business models. moreover, by conducting retail activities from a separate locally - incorporated entity, the bank will be seen by local retail customers as being strongly committed to the local market for the long - term. international discussions on this topic are ongoing and mas is monitoring the debate closely. conclusion to conclude, singapore has built a reputation for credibility and prudence

to move to more innovative sectors. successful examples of such measures have been introduced in spain, ireland and other reforming countries. the process of private sector debt workout is also advancing. the ecb ’ s comprehensive assessment has accelerated the crucial step of acknowledging and provisioning for npls. what is now key is that, where necessary, those npls are further restructured through more efficient insolvency proceedings or removed from banks ’ balance sheets altogether. several countries have taken national initiatives to improve in - and out - of - court restructuring frameworks and establish asset management companies for npls. this could be supported at the european level by progressing with capital markets union, which should induce greater legal convergence and deepen markets for distressed debt. supporting the deleveraging process in these ways – by raising real growth and working out private debt – would provide further momentum to the recovery, while raising confidence in long - term growth prospects. but importantly, balance sheet repair also creates the preconditions to address definitively one of the euro area ’ s key institutional weaknesses : the incomplete banking union. a great deal of progress has been made in this area in recent years. with the single supervisory mechanism we now have a system of supervision that is less liable to capture or forbearance. the bank recovery and resolution directive provides a harmonised and predictable framework for private sector risk - sharing across the union. and governments are on the way to establishing a european public backstop for the single resolution mechanism. but if we are to complete banking union – notably in terms the backstop to the srm and establishing a common deposit guarantee scheme – legacy assets need first to be fully addressed. that is why balance sheet repair is pivotal. completing banking union also requires removing any remnants of the regulatory framework that implicitly support home bias. for example, how much national discretion is allowed in implementing rules ; how fungible are liquidity and capital across borders ; how regulations, such as those on loss - absorbing capital, affect the choice of subsidiaries versus branches – all these decisions will crucially shape the microeconomic incentives of banks to become european. and the macroeconomic consequences for the union are significant. conclusion to conclude, working through the aftermath of a financial cycle requires a comprehensive response. monetary policy will play its part for as long as needed, which means the full implementation of the asset purchase programme and, if necessary, adjustments to its size, composition and duration. and by meeting our objective, we support growth and inflation,