stability mechanism, could directly recapitalise banks under certain conditions ; and they pledged to use the instruments of the rescue funds flexibly and efficiently. another important element of the package was to create a “ single supervisory mechanism ”, as it was called. banking supervision was to be taken from the national to the european level. just two years later, european banking supervision became reality. in november 2014, the ecb began to supervise banks in the euro area. but how does the new european system work? and why is it better than the old national ones? some people think that the ecb has become the sole supervisor of all banks in the euro area. well, it is true that european banking supervision has put an end to the patchwork of national 1 / 6 bis central bankers'speeches supervision. but in essence, it is a common european undertaking. in the euro area, we divide banks into two groups : large ones and small ones. and it is the 126 largest banking groups which are directly supervised by the ecb – they are called “ significant institutions ” and account for 82 % of the euro area ’ s banking assets. for each of these large banks, we have set up a “ joint supervisory team ”, or jst. these jsts are headed by ecb staff and comprise supervisors from both the national authorities and the ecb. it is these teams that actually supervise the banks. they are at the heart of european banking supervision. alongside the 126 largest banking groups, there are around 3, 300 smaller ones, the “ less significant ” institutions. these banks are still directly supervised by the national authorities. nevertheless, the ecb plays a role, too. together with the national authorities, it develops and implements supervisory standards for the smaller banks, and it ensures that supervisors apply these standards across the euro area. and not only is the day - to - day supervision of banks a joint task. decisions are also jointly prepared and adopted. the main bodies in this regard are the supervisory board and the governing council of the ecb. the supervisory board is chaired by the ecb and includes representatives from all the national supervisory authorities. the governing council of the ecb in turn comprises the governors of all the euro area central banks and the executive board members of the ecb. it is true to say that national authorities are no longer responsible for supervising their largest banks. but they share their knowledge and experience with the ecb, which directly supervises the largest banks and oversees the entire

. the ecb is involved in the oversight of uk central counterparties through supervisory colleges and a memorandum of understanding with the uk authorities. this framework enables us to monitor risks to the euro – also due to good cooperation with our british colleagues and legal certainty afforded by the european court of justice. in view of brexit, some might now ask whether it would make sense in the future for the majority of euro clearing to take place outside the eu. well, that depends on whether the new framework will offer us the same level of involvement as we have today. and it depends on whether the new framework will be strong enough to ensure financial stability in the euro area. to sum up : access to the european market is important for the financial sector. and the financial sector is important for the british economy. losing that access would therefore have an impact – not only on the banking sector itself but also on the uk ’ s economy. we are talking about jobs, income and prosperity. the question therefore is : will london remain a global financial centre? yes, it will. but at the same time, it might lose part of the business, while europe might attract some of it. the race is on, and many cities are competing for the banks – either to keep them, in the case of london, or to attract them, in the case of other cities in europe. in the end, there probably won ’ t be a winnertakes - it - all scenario. some banks might go to dublin, some to paris, others to frankfurt or elsewhere in europe. as i said, the ecb is neutral. still, the competition must not result in a race to the bottom with regard to regulation, supervision or taxation – neither in the uk nor in the rest of europe. such a lowering of standards might work in the short term, but in the long term it would do more harm than good. that is why european banking supervision will not change its policies in the wake of brexit. in fact, strong rules and strong supervision should attract banks – they boost the reputation of banks, increase people ’ s trust, and that ’ s good for business. and above all, strong rules serve a purpose : they help to prevent future crises – not only at a national but also at a global level. and financial crises can be very costly. the financial sector will always test the boundaries of regulation ; it will always look for the best deal – globally. we therefore need global rules to make the