risk as well. however, maintaining a level playing field and coordination between member states remains in my view paramount in order to avoid a distortion of fund contributions and resolution tools. challenges ahead – more integration i am confident that the emerging eu regime will appropriately address all these challenges. as for cooperation among authorities, the new resolution regime will take the form of a coordination framework. accordingly, national authorities will ultimately maintain their discretion in the most important decisions, although they will be strongly encouraged to try to reach joint decisions on the ways to handle bank crises in resolution colleges. this is a realistic approach, already representing a major step forward. however, i think there may be a need for even more integration in the longer term. as an example, insolvency laws are addressed by neither the fsb standard nor the eu proposal – at least not its first phase of implementation – although they may well be important in practice. one also wonders whether there are other areas in which we could make progress. there were, and in fact continue to be, numerous proposals for the optimal european arrangement in the academic and policy sphere. let me just mention three of them, which i find particularly inspiring. most of you will be familiar with the influential arguments of charles goodhart and dirk schoenmaker, who have said that, as a form of coordination among national governments to handle cross - border bank crises, legally binding burden - sharing rules should be drawn up ex ante. others, including david g. mayes, have recommended adopting the prompt corrective action approach of the united states by designing a framework that would be based on stringent rules. under such a framework, it would be clear for both banks and the authorities, that measures of increasing intrusiveness would have follow as the financial situation of a bank worsened. an important element of such a regime that limits moral hazard, regulatory forbearance and creditor losses as well, is that authorities are obliged to take over a failing bank before its capital is fully depleted. bis central bankers ’ speeches finally, many, including the staff of the imf, have supported the idea of a european resolution authority responsible for crisis management and resolution, probably combined with a european deposit insurance and resolution fund. this is certainly the most ambitious plan of all, but was always considered as politically challenging and legally difficult to implement. advancing towards a truly european solution i believe that all these proposals have important elements. in my view, the optimal arrangement for the eu would probably draw

mentioned here today, the financing part is probably the biggest obstacle for such a quantum leap. however, in another dimension and for the euro area we already have the efsf in place. such a facility would have been simply unthinkable a couple of years ago. similarly, i consider the setting - up of a permanent eu or euro area resolution fund to be one imaginable way to proceed. of course, i am fully aware of the technical, legal and, most importantly, political complexities of such a move. nonetheless, europe could advance step by step. the euro area may be the most realistic starting point, since a stronger concept of the euro area as a legitimate entity has already been emerging. likewise, fiscal coordination has been fundamentally strengthened during the crisis, paving the way for a specific economic governance concept for the euro area. for the euro area i will say clearly : we need for cross - border banking institutions a european resolution authority, including or combined with a resolution fund, as well as a european supervisor. this requirement is not only a necessity stemming from the high degree of interconnectedness among euro area banks, but bis central bankers ’ speeches constitutes also a major lesson of the present crisis. indeed, some of the major imbalances that are besetting the euro area stemmed from uncontrolled behaviour of some banking sectors that eventually contaminated the sovereign. however, in the longer term, one can only envisage an integral eu resolution framework on a full eu basis, reflecting the highly integrated financial system in the eu. in parallel with the establishment of an eu resolution fund, we could gradually also start preparing to set up an eu - level resolution authority. following a pragmatic approach, we could focus on the recently established cross - border stability groups. common practical guidelines and blueprints could be prepared for them to foster a more harmonised approach for resolution across jurisdictions. with a more forwardlooking approach, on the basis of frequent peer reviews, qualitative assessments and stocktaking of best practices, we could gradually explore the possibilities of entering into more binding multilateral agreements within these groups, which in turn would pave the way for an eu - level authority. we should not forget that the supervisory reform process based on the de larosiere proposals is not yet finished. the review of the new eu supervisory authorities is scheduled for 2014. while the optimal supervisory structure of the eu is a topic that deserves a separate speech of its own, it