reduce the risk of migration of activities to the shadow banking system. having the deposit bank and trading entity under one roof would also allow “ one – stop banking ” to continue where it is to the benefit of customers. in january 2014 the european commission presented its proposal for a regulation on structural measures improving the resilience of eu credit institutions. bis central bankers ’ speeches the commission proposal would cover the largest and most trading - intense banks in europe. the proposal obliges the competent authority to review trading activities and empowers the competent authority to require separation of market - making, risky securitisation and complex derivatives when specific conditions prevail. the commission proposal leaves an important role for the future judgment of the competent authorities ( which in most cases would be the ecb ), the eba and the commission itself in detailing the separation process and metrics to be used. here transparency, predictability and public accountability are crucial. moreover, the elements of discretion need to be implemented without compromising the level playing field in banking and the integrity of the internal market. in some respects, the proposed regulation does also differ from the group ’ s recommendations. the commission ’ s proposal includes an outright ban on organised proprietary trading instead of requiring it to be assigned to a separate and separately capitalised legal entity. even though the definition of proprietary trading is rather narrow, the commission proposal resembles the structural reform implemented in the united states. the commission proposal is now in the hands of the council and the european parliament. banking union today, our focus is on the single supervisory mechanism, an important element in the european banking union. the changeover to the banking union is definitely the biggest change in the european financial regulatory framework since the adoption of the euro. with the ssm taking its fully operative role in just a few days, this conference could not be better scheduled to discuss the developments in supervision. the decision on the creation of the common supervision was taken by the european council only two years ago in june 2012. the idea of common european supervision was not new, but it had been debated in various forms and fora. one of the proponents of common supervision was professor jean tirole who proposed integration of supervision with the ecb as an early lesson from the financial crisis. on sunday, the first core project of the ssm was finalised, when the results of the comprehensive assessment were published. this exercise provides a very good starting point for both the european banking sector and the ecb as a common

in place until we consider the covid - 19 crisis phase to be over. let me next turn to the ecb monetary policy strategy review. after being postponed due to the crisis, the review was re - launched last month, and it is expected to be completed by september next year. the essential underlying reason for the strategy review is the profound structural changes in the euro area and in the global economy. these include, in particular, the change in the relationship between the spare capacity of the economy and inflation, as well as the long - term decline in the natural interest rate and the sluggish productivity growth. the lower natural interest rate has reduced the room for interest rate cuts, as the effective lower bound lays the floor for them. however, non - standard policy measures have alleviated this constraint to some extent. a reassessment of the ecb ’ s monetary policy strategy is all the more necessary given both the long - term low inflation – or ‘ lowflation ’ – and the damage wrought by the covid - 19 pandemic. 1 the strategy review will cover a wide range of subjects, including climate change and digitalization, and it is supported by in - depth analyses of the forces that drive inflation dynamics today – or rather, slow them down. one of the key issues of the review and of monetary policy 1 / 2 bis central bankers'speeches today is inflation expectations, and how they should or could be correctly anchored. in the early years of its operation, the ecb was seeking to establish credibility in an operating environment in which too high inflation was the main concern. this led to the ecb successfully capping inflation expectations by aiming for inflation of “ below, but close to, 2 % ”. however, in the current environment of chronically low inflation, it is more important to ensure that inflation expectations are not anchored at too low levels. today, that is regretfully the case, which has been amplified by the perceived ceiling and asymmetry in the price stability definition, as demonstrated in a recent paper by bank of finland researchers. 2 to underpin inflation expectations, the first thing to do is to make sure that our inflation target is defined as symmetric – and in particular that the public understands it as symmetric. my way of thinking is thus largely similar to that expressed by president lagarde in her recent speech. 3 in other words, what we need is, first of all, a clearly and genuinely symmetric price stability target, and secondly,