##s. evidently, the exercise aims to strengthen confidence in the european financial system through transparency and reinforcing the solvency of those banks that need it. nonetheless, the spanish experience, in particular that from the exercises performed in 2012 under the financial assistance programme, shows that the proper metric for measuring attainable credibility is not based on the estimated capital needs resulting from the exercise, but on the application of a sufficiently rigorous methodology enabling all potentially vulnerable segments of the european banking system to be evaluated consistently, particularly those whose reflection in the financial information published is of greater complexity. it is moreover important that, as announced in the public communique released, the measurements of capital made should be consistent with the regulatory framework in force which, in europe, essentially comprises the recently enacted community directive and regulation on capital requirements. bis central bankers ’ speeches thanks to the reform undertaken and the measures applied by banks, the spanish banking system is, generally, in a reasonable position to face these exercises. however, obtaining a positive result in the exercise is only a favourable starting point for assuming the new supervisory regime in a macroeconomic and financial framework which, despite the recent improvement, remains beset by challenges to banks. accordingly, irrespective of the results of the exercise, banks should continue to focus on implementing measures geared to capital preservation, improved efficiency and the pursuit of rigour in the recording and monitoring of asset quality. single resolution mechanism and fund the second essential element of banking union is a single resolution mechanism. it has been said on numerous occasions that unified supervision will not suffice to eliminate market fragmentation. another prerequisite is that similar banking liabilities of banks based in different jurisdictions must receive similar treatment in the event of solvency problems. in order words, the resolution of vulnerable banks has to proceed according to common rules applied on a centralised basis by a single authority. regarding regulations, the agreement reached to approve the future bank recovery and resolution directive is a notable step forward because it offers a common framework for orderly bank resolution at a minimum cost to taxpayers. the directive introduces burden - sharing or bail - in arrangements establishing a minimum amount and clear order of cost assumption by shareholders and creditors. it thus makes for accurate perception of the risk associated with each liability instrument and minimises the bill to be footed by taxpayers for the disorderly winding - up of banks. also envisaged is a resolution fund fed by contributions from the industry to meet any needs for capital which cannot be covered by burden - sharing

missteps which inevitably accompanied the initial design of the programme of assistance, it worked out to bis central bankers ’ speeches deliver, as i have said on a previous occasion, what it said on the tin : restoring market confidence and stabilising not only the public finances but also the economy. the rest is up to us, the irish policy makers and the irish people, to complete the recovery of the economy – which has been on a persistent growth path both in terms of output and employment for the past three years – and to rebuild the economic aspects of irish society in a way which fully resonates with our shared vision and goals. it is often observed these days that key among the characteristics needed to prosper in what seems to be a rapidly changing and increasingly unpredictable global economic environment are resilience and the adaptability to take advantage of new opportunities and trends. i believe that irish resilience has been fully demonstrated in the way in which the economy has been recovering from the disaster that struck in 2008. ireland ’ s adaptability and openness to the opportunities that emerge in the world have been well demonstrated in the rapid and firmly founded growth of the mid - to late - 1990s – the true “ celtic tiger ” period. that is why i believe there are solid reasons for optimism about the future, building on the platform of restored financial stability which the eu - imf programme helped us rebuild. bis central bankers ’ speeches