. the minimum capital requirement set by the lawmaker is, as such, stronger. it ’ s a more important requirement. however, the supervisory pillar 2 requirements are relevant as well. there ’ s a threshold too, but it is set by the supervisor, so when pillar 2 requirements are breached, rather than the minimum capital requirements, the supervisor needs to apply the proportionality principle : supervisors need to give the bank time to rectify the deficiencies, to find a solution. a breach might occur from a forward - looking perspective, and if so, then the supervisor tells the bank it has to provide a capital plan which shows the possibilities to counter this breach, to restore capital again. now, you have to look into the capital situation of these banks, which are public, and their capital increases in recent years. we were quite insistent on addressing the risks in both banks, which led to the need for capital increases. and then the last time there was a question of a capital increase, additional questions arose : who would be the investors, what kind of business plan would work, what kind of restructuring would be necessary, in short, what kind of prospects would the banks have? it was clear - cut that there was no adequate solution, and so then we had to act. if pillar 1 is breached the supervisors have to act much faster, but with pillar 2, which is set by the supervisors themselves, there are different obligations. does this not create problems for the banking union then, because you ’ ve got a system where – even if these rules had been followed to the letter – the spirit of the new rules, and banking union, was this idea that taxpayers weren ’ t on the hook. and you need that in order to be able to push for deposit insurance in a next step. instead, it now looks like taxpayers are once again on the hook. that is the second part. but would it not be less expensive for the taxpayer if you were able to declare the bank 7 / 11 bis central bankers'speeches failing or likely to fail sooner, because there ’ s a situation now where the bill is €17 billion, whereas if you were able to do it in a shorter timeframe you would find that the taxpayer bill would be a lot smaller. that is a question of balance. on the one hand, and i fully agree, a supervisor has to be forwardlooking. that ’ s why the question with regard to the deduction from own funds is a correct

##g | columbia | sipa, eib, societe generale conference on “ eu and us perspectives : new directions for economic policy ”, 11 october. 17. ecb staff estimates that the downward impact on gdp growth coming from policy normalisation is on average 1 percentage point per year until 2024, while the downward impact on inflation increases gradually, reaching 1 percentage point in 2024. the estimated impact refers to the average across a set of models used by the ecb for policy simulations, including the nawm - ii model ( coenen, g., karadi, p., schmidt, s. and warne, a. ( 2018 ), “ the new area - wide model ii : an extended version of the ecb ’ s microfounded model for forecasting and policy analysis with a financial sector “, working paper series, no 2200, ecb, november ( revised december 2019 ) ), the ecb - base model ( angelini, e., bokan, n., kai, c., ciccarelli, m. and zimic, s. ( 2019 ), “ introducing ecb - base : the blueprint of the new ecb semi - structural model for the euro area ”, working paper series, no 2315, ecb, september ), and the mmr model ( mazelis, f., motto, r. and ristiniemi, a. ( 2022 ), “ monetary policy strategies in a low interest rate environment for the euro area ”, forthcoming ). 18. obstfeld, m. ( 2022 ), “ uncoordinated monetary policies risk a historic global slowdown ”, realtime economics blog, peterson institute for international economics, 12 september. 19. estimates are obtained based on a sample spanning 1991 to 2019, using high frequency - based us monetary policy shocks ( sum of conventional, odyssean forward guidance and quantitative easing ) in monthly smooth local projections ( see jarocinski, m. ( 2021 ), “ estimating the fed's unconventional policy shocks ”, working paper series, no 2585, ecb, august ( revised june 2022 ) ). 20. obstfeld, m. ( 2022 ), op. cit. 21. recent analyses show that the euro area lags notably behind the united states in terms of labour market efficiency ( although levels for individual euro area countries vary, see chart 1 in sondermann