. at the initiative of politicians ( financial services committee, fsc ), work is now under way on establishing mediation within cebs as well. transferring a procedure that was designed for securities trading raises a number of questions. unlike in the securities sector, in the banking field mediation does not have a legal foundation. although mediation is voluntary, and its results legally non - binding, considerable “ moral ” pressure to abide by the results is likely to be created. moreover, it is not just specific “ cases ” or “ products ” which are at issue in cebs to become subject to mediation but large sections of supervision. it must also be noted on 27 march, econ will probably adopt a report on the commission white paper on financial services policy 2005 - 2010, which advocates, in surprisingly clear language, a centralised supervisor. in paragraph 34, econ “ [ n ] otes that for a real oversight of the systemic and prudential risks of the top players in the market, the present system of cooperation is too weak, and promotes a well - equipped executive european prudential supervisory authority inside that system endowed with the appropriate competences for supervision of large cross - border and cross - sector financial conglomerates ”. that the competencies of the potential mediation parties differ in the field of banking, depending on whether they are home or host supervisors. at the same time, the question of need for a mediation also arises in some areas. thus, for instance, it is an option for approving group - wide risk - measurement procedures pursuant to article 129 ( 2 ) of the crd. however, cebs has already developed “ guidelines on validation ” with the aim of reaching a common decision within the six - month period. seen in that light, the use of meditation might be criticised as an example of excessive bureaucracy. mediation cannot – and must not be allowed to – undermine the european or national legal framework. although areas such as “ legal proceedings ” and “ national legislation ” are not being envisaged as objects of mediation, the possibility of subjecting national discretion – and, thus, national legislation – to mediation has not been clearly ruled out, either. conclusion : careful thought should be given to the areas to which such a procedure is to be applied. although mediation may help, it could also cause harm if the legal framework were abandoned entirely or interpreted too broadly. mediation is not a new “ lamfalussy procedure ” for adopting legislation but merely a tool for resolving disputes within

than the prices banks would be prepared to sell them for. structural inefficiencies in debt and collateral enforcement also contribute to the lack of market turnover. the legal procedures for collecting a simple claim take too long and cost too much in many euro area countries. on the demand side, investors are also deterred by high uncertainty around recoveries and their timing, and by barriers to entry such as licensing requirements. these symptoms of market failure, aggravated by legal constraints, call for a public policy response. european and national authorities should launch a comprehensive strategy that combines a range of suitable tools to deal effectively with europe ’ s npl problems. a key aspect of that strategy will be aligning incentives between the parties involved : banks, investors and the authorities. a number of tools look particularly promising. national asset management companies ( amcs ), if designed correctly, have been successful in relieving banks ’ npl burdens and recovering asset value. a blueprint for national amcs in the euro area – essentially, a manual for setting up an amc – would save authorities time and money. in addition to clarifying in detail how amcs can be made compatible with the eu legal framework, such a blueprint should identify international best practices for key aspects of amcs such as eligible asset classes, participation requirements, 1 / 2 bis central bankers'speeches asset valuation, capital and funding structures and governance. apart from amcs, securitisation schemes also have the potential to kick - start the npl secondary market, but may require public intervention to signal that governments are determined to follow through with structural reforms that will improve asset valuations. npl trading platforms or clearing houses should also be fully explored, even at euro area level, to increase npl transparency and stimulate transaction activity. to be successful, however, all of these options require a considerable push for structural reforms related to debt enforcement and a reduction of information asymmetries. if these measures become credible, investors will recognise the shift in policy and should ultimately be willing to pay higher prices for npls. the european commission has recently announced that it will come forward with a proposal for a comprehensive and coordinated strategy to deal with npls, including a blueprint for national amcs. it will be then imperative that all relevant authorities act rapidly and decisively to implement the necessary measures to overcome the npl problem thereby strengthening the ongoing european recovery. much hard work is needed, on many fronts, to deliver these benefits. but neither partial