rules in courts. the long horizon of many measures should not reduce the sense of urgency and necessity. all of these reforms are essential not only for the resolution of europe ’ s npl burden, and also as prevention of the renewed build - up of npl in future cyclical downturns. financial benefits of speedy action may surface more quickly too. if these measures become credible, investors will recognise the shift in policy and should price higher expected future returns into loan valuations. let me conclude. while npls are rightly seen as a problem, their resolution could unlock significant benefits to the european banking system and the european economy. the benefits from resolving the npl problem are unquestionable, but a great deal of hard work is clearly needed, on many fronts, to deliver them. neither a partial solution, nor further waiting is an option. acting only on the supply side of the npl markets and forcing banks to sell may have serious financial stability consequences. the resulting transfer of value from banks to the investor community would put further pressure on bank profitability, instead of relieving it. for this reason, a comprehensive, co - ordinated effort on the part of several european and national authorities is now crucial. 1 based on the imf financial soundness indicator database. 2 according to the ecb supervisory banking statistics. 3 the value of collateral reported in supervisory statistics is capped at the value of the exposure, therefore the actual collateral pledged against npls is likely to be significantly higher. 4 see deloitte ( 2016 ), “ deleveraging europe 2016. h1 market update ”. 5 see g. akerlof ( 1970 ) “ the market for “ lemons ” : quality uncertainty and the market mechanism ” in the quarterly journal of economics, vol 84, no. 3, pp 488 – 500. 6 see fell, j., m. grodzicki, r. martin and e. o ’ brien ( 2016 ), “ addressing market failures in the resolution of non - performing loans in the euro area ”, special feature b in financial stability review, ecb, november 2016. 7 see ecb ( 2016 ), “ stocktake of national supervisory practices and legal frameworks related to npls ”, september 2016. 8 on the possibilities of interpreting the relevant european legislation see the recent ceps special report by bruzzone, cassela and micossi ( 2016 ) “ fine - tuning the use of bail - in

we want to prevent people from drawing the wrong conclusions from partial or inaccurate results. publication of the final results is the only approach that makes sense. constant reports on the status quo are of little value. however, a bank ’ s business model will also be accorded great significance in a dynamic stress test, which will follow the rather static balance sheet assessment. the main promise of euro area policy - makers is that taxpayers will no longer have to foot the bill for ailing banks. some politicians say no more taxpayers ’ money will flow at all. that seems very optimistic to me, but i am not a politician. it will be our task to minimise the likelihood that banks run into difficulties in the first place. the policy - makers ’ argument is that there should be no bail - out in future, but rather a bail - in. but these rules do not take effect until 2018. what will happen in the meantime? for the interim period the commission has drawn up rules for national state aid, which also follow the principle of bail - in. besides, the european parliament is doing all it can to advance the resolution rules governing the bail - in. in addition, individual countries may bring these forward independently. the bank resolution fund should also bear the costs of resolving banks. but this fund, which should be financed by banks ’ contributions, so far only exists on paper. the ecb and the eu commission have suggested that the european stability mechanism ( esm ) crisis fund might provide a loan. does that mean taxpayers may end up paying for bank crises after all? a credit line is conceivable ; it would give security. however, that should certainly not be a permanent loan : it may only be interim financing that will not cost taxpayers anything in the long run. the credit should be extended on market terms ; that might even be a good deal for taxpayers. if it is such a good deal, why can ’ t other funding sources be found in the market? that option is also contained in the commission ’ s proposal. if the esm provides a credit line, the esm rules would have to be changed. in germany that would require parliamentary approval, in other countries that would not be necessarily be the case. a final question on international monetary policy. in janet yellen, the us federal reserve will have a chairperson who is known as a “ dove ” and who will probably pursue an accommodative monetary policy for some time to come. are you pleased that you