as across borders, regions and sectors. fourth, regulation must be guided by the principle of proportionality. abiding by these principles will not, of course, allow us to solve every single regulatory problem. yet they do provide us with a yardstick for assessing regulatory provisions. and i do believe that is very valuable. 3. what is “ good supervision ”? all in all, though, even the best regulation is useless if nobody is overseeing compliance. and that is precisely the job of supervisors. supervisors have to make sure that, in the banks ’ search for profit, they follow the rules and do not lose sight of the public interest. do supervisors have to be the “ better bankers ”? no, absolutely not. business decisions must be left to those being paid to make them. however, supervisors have to know – and understand – how banking works. against this background, i personally would very much welcome an increase in the migration of staff between the banking industry and the supervisory agencies. i therefore consider it a good sign that a large number of bankers have been applying to join the ecb ’ s new european supervisory mechanism. and at the bundesbank we are also noting a rise in the number of bankers showing an interest in and applying for vacancies in our banking supervision units. it is also important for supervisors to always remain aware of their true objective : to uphold the public interest. they must not allow themselves to succumb to a sort of “ stockholm syndrome for supervisors ” and confuse the public good with that of the supervised banks. bis central bankers ’ speeches 3. 1 the new european supervisory mechanism... this is an area where the new european supervisory mechanism can make a key contribution. by adding a european perspective to the national view, it will put more distance between the supervisor and the supervised entity. this will minimise the danger of supervisors getting all - too - close to their banks and thus treating them with “ kid gloves ” out of national interest. all in all, european - level supervision is the most important step towards financial market integration in the euro area since the launch of our single currency. it is a logical step, too, since a single monetary policy also requires integrated financial markets – which includes, without doubt, european - level supervision. an in - depth examination of all banks which will later be supervised directly by the ecb is now underway. the objective of this comprehensive assessment is to ensure that the new european supervisory authority has a smooth launch. we

single supervisory mechanism for systemically important banks as well as a single resolution mechanism will be an important step forward. in this regard, a common resolution regime will have to ensure that banks without a viable business model can exit the market in an orderly fashion. such a regime is crucial not only for financial stability, but for sustainable growth as well. a functioning resolution regime strengthens incentives for effective credit monitoring and moderates banks ’ risk appetites. in so doing, it enhances the allocation of capital and reduces the risk of a bubble emerging. better still would be if banks didn ’ t reach the point of having to be wound down in the first place. in this regard, higher capital requirements are a big part of the solution – the single supervisory mechanism is another. the role of monetary policy these are necessary steps that will put the euro area back on the path to prosperity. finally, please allow me to make a few short remarks on the role of monetary policy during the crisis. monetary policy has already done a lot to absorb the economic consequences of the crisis, but it cannot solve the crisis. this is the consensus of the governing council. the crisis has laid bare structural shortcomings. as such they require structural solutions. “ structural reforms may hurt a few vested interests, but they would clearly strengthen the effectiveness, competitiveness and, yes, also the fairness of our economies. ” those are mario draghi ’ s words, not mine. i agree, however. the best contribution a central bank can make to a lasting resolution of the crisis is to fulfil its mandate : that of maintaining price stability. and this is what jacques rueff actually meant when he made that famous statement in 1949. as david marsh has pointed out, it was a declaration of support for common principles of monetary stability rather than an early advocacy of a single currency. we should not jeopardise now what we have fought so long to achieve. conclusion ladies and gentlemen, let me conclude. monetary union has always been both a political project and a prosperity promise. to fully unleash the common currency ’ s potential, efforts are needed on two fronts : structural reforms as well as the abolition of implicit guarantees for banks and sovereigns. but i did not come here to preach ; i came here to discuss, to listen, and to learn. so without further ado, i would like to hand over to our moderator, nicolas beytout. bis central bankers ’ speeches