banks ’ risk situations. that ’ s why europe would have to be given stronger rights to intervene in national economic policies, and a harmonised set of rules would be needed, before a european deposit guarantee scheme can be set up. that path means ceding certain rights to control national budgets to the european level, and it is one that ultimately leads to what is known as a fiscal union. for sure, such a step would require euro - area countries to surrender a degree of national sovereignty to europe. a move of that kind would necessitate wide - ranging changes to both national and european legislation. and to be honest, i don ’ t see much willingness to go down that path right now. bearing that in mind, i strongly advise against taking the second step before the first. to be honest, i do not really see a reason for being in hurry in this issue. in 2014, we introduced largely harmonised rules for deposit insurances, ensuring that deposits up to 100. 000 euro are secured in case of a bank ’ s insolvency. the risk of this insurance, today, lies with the respective member state the defaulting bank is located in. i am convinced that as long as banks ’ well - being is still so much affected by national legislation, this is an appropriate setting and there is no justification for pan - european risk sharing without fundamental adjustments to the current framework. 4. working together : the road to success the creation of the banking union has significantly bolstered the financial supervisory architecture in europe. if we define “ success ” as “ maintaining financial stability ”, then focusing our efforts solely on banking supervision would be like making the road to success a narrow, single - lane highway. supervisors can only be as effective as the rules and regulations they apply. what we need to do, then, is add a second lane to that road – a sound regulatory framework for the banking system – for that was an area in which the financial crisis laid bare a number of shortcomings. significant progress has been made in the regulatory space in the more than seven years that have elapsed since lehman brothers went under. the most important measure was the basel iii framework in 2010, which introduced stricter capital requirements and new liquidity rules. when basel iii is fully implemented in 2019, regulatory capital requirements will be significantly higher and tougher than under basel ii, and i firmly believe that the financial system today is already more stable than before. the basel committee has forged ahead along

this path over the past few months – one of the items on its “ to do ” list for 2016 is to finalise the basel iii reform package before the end of the year. and things are moving along swiftly – the fundamental review of the trading book ( frtb ) was endorsed by the central bank governors in january, which means that the new market risk framework will take effect in 2019. work is also ongoing to address the problem of excessive variability in risk - weighted assets by the end of 2016. the basel committee has set its sights on two outcomes : removing internal model approaches for certain risk types, and placing constraints on the use of internal model approaches for credit risk, in particular through the use of floors. in parallel, the standardised approaches for credit and operational risk are reviewed. another issue the committee is currently working on is the final design and calibration of the leverage ratio, so that it can be implemented as a pillar 1 measure by 1 january 2018. to make one thing clear : the regulatory projects mentioned do not target on imposing further burdens on the banks – which would mean first and foremost higher capital requirements. in that regard, i highly appreciate the overall impact study the basel committee will conduct this spring, which will give us precious hints on how all the regulatory measures interact and should be calibrated. i think the basel committee is on the right track, and finalising the basel iii reform package in 2016 is my regulatory priority in 2016. bis central bankers ’ speeches while we may rightly expect much of the basel iii framework, it is no secret that higher capital standards and new liquidity requirements are not the only toolkit available when financial stability is at stake. that ’ s why the basel iii regime has been flanked by a host of other regulatory projects that have been launched in response to the financial crisis : the “ too big to fail ” issue, sovereign exposures and the shadow banking system are just three regulatory projects i could name. this is neither the time nor the place to explore these regulatory projects in any great detail, of course. but there is one point i really would like to stress. all the regulatory projects i mentioned just now call for international cooperation – and not just on the basel committee for banking supervision or the financial stability board, where it works very well. if we as national regulators do not coordinate our approaches to regulation, we will create a fragmented financial system that opens up vast opportunities for regulatory arbitrage. so working together – as regulators