and moves us to the culture of the bail - in. bail - in will be the rule, bail - out a rare exception. as from the beginning of 2016, or in some countries even earlier, the brrd requires bail - in of shareholders and creditors equal to at least 8 % of the total liabilities of a bank. the new powers to bail - in bank debt holders are a crucial, element of the future resolution mechanism, which should limit the use of bail - outs significantly. the srm with its supranational decision making body and resolution powers, ensures efficient decision making procedures, adequate resolution financing arrangements and equal treatment. it has the same institutional and geographical scope as the ssm. single resolution board the regulation provides for a single resolution board with broad powers. upon notification by the european central bank that a bank is failing or likely to fail, or on its own initiative, the board would adopt a resolution scheme placing the bank into resolution. the board will consist of a chair, a vice - chair, four full - time appointed executive members and the representatives of the national resolution authorities of all the participating countries. it will exercise its tasks in either a plenary or executive format. it will determine the application of resolution tools and the use of the single resolution fund. decisions by the board will enter into force within 24 hours of their adoption, unless the bis central bankers ’ speeches commission or the council, acting by simple majority on a proposal by the commission, objected or called for changes. the national resolution authorities will be responsible for the practical implementation of the resolution schemes. however, the board ensures that there is no national bias and the identical cases are treated identically. single resolution fund the srm includes a special resolution fund to provide resources for implementing resolution tools. the single resolution fund will be financed via levies on the banking sector itself. the fund will ensure the availability of medium - term funding to enable the bank to continue operating while it is being restructured. it has a target level of €55 billion and can borrow from the markets if decided by the single resolution board. it will reach the target level over eight years, starting in 2016. during that transitional period, there will be national compartments which will be progressively merged. the fund makes banks not only less likely to fail but also safe to fail – meaning that they can be resolved without cost to the taxpayers and without significant disruption to the financial markets or the economy at large. the fund is not to capitalize

the european deposit insurance scheme, which i hope will move forward soon, will help stabilize bank liquidity even under future adverse shocks. the regulatory framework is not complete even when the projects i mentioned will be finalized. it is not complete even from the central banks'risk management point of view. the constantly evolving financial industry brings up new challenges which must be taken into account. currently, the unregulated segment of financial intermediation ( " shadow banks " ) are a source of concern. they make the central banks'job of protecting financial stability harder, because they are not subject to the same monitoring and accounting scrutiny as banks, and as they cannot be monetary policy counterparts of central banks, their liquidity can be more fragile. the 6 / 7 bis central bankers'speeches consequences of the activities of the shadow banking sector to the volatility of the supply of liquidity is a challenge which awaits proper regulatory response. conclusions the central banks have faced new challenges in their risk management over the last decade. these challenges are in some respect similar to what other banks have met, but the policy role of the central banks have made them even more complex. the central banks must consider not only their own risks but also broader risks in the financial sector and the macro - economy when they make decisions about what risk to take. the challenges in organizing the risk management function in central banks are more challenging than in other financial institutions, because of the interaction of their policy responsibilities, to cope with these challenges, it is essential that : while prioritizing their policy responsibilities, the central banks should take care of their financial health ( adequate capitalization ) so that they are not vulnerable to the financial consequences from their policy tasks. central banks need to ensure that the political decision - makers and the general public understands what the central banks are doing and why. lack of communication and lack of transparency can breed suspicion that the central banks are taking risks that are excessive relative to the benefits achieved with their policies. deep and coherent participation by the central banks in the public debate at the national and euro area level are needed. in terms of financial regulation, the challenges that the central banks'policy responsibilities cause to their risk - taking capacity are met more easily if the financial health of the banking system is sound ; if the supervisory information is sufficient ; and if crisis management procedures and institutions are up to their tasks. when those conditions are met, the central banks'main financial stability task, the provision of liquidity to fundamentally sound institutions