financial stability can be national or even sub - national, and hence affected by the failure of a local bank. we were talking about the alternative resolution - liquidation, but the criticism may be extended to the no - bail - out principle underlying both. the international monetary fund has suggested a ‘ financial stability exemption ’, whereby it is explicitly recognized that the srm is meant to deal with idiosyncratic events and that the existing arrangements could not solve system - wide crises. 9 imf ( 2018 ). prudential supervision has been micro for decades, if not centuries. the macro - prudential perspective is relatively new and still little understood and not widely adopted around the world. we all know that there can be a tradeoff between micro and macro policy objectives in the financial system. 10 for instance, if we want to protect macro financial stability, we may contemplate bailing out a bank with taxpayers ’ money, but if we want to avoid any moral hazard at the micro level, we have to rule out as far as possible the involvement of taxpayers in rescuing banks. a balance must be found between these conflicting objectives. 5. conclusions let me conclude. in an incredibly short timeframe a comprehensive framework for banking supervision and crisis management in the euro area has been designed and put in place ; thousands of experts are working together to achieve common goals ; methodologies, tools and resources have been pooled in order to benefit from the best national practices ; cooperation between the centralized hubs ( in frankfurt and brussels ) and the national authorities has been fruitful, even in the case of disagreement. last but not least, banks in the euro area are now stronger than 10 years ago. this positive experience shows that the challenges ahead can be successfully addressed in a pragmatic way. banking supervision needs to be constructive, not destructive. this is always true, but in the euro area today it needs to be constantly remembered. prudential rules and practices should be strict but proportionate, and they should always keep the playing field level. we should also take into account the competitive conditions between our banks and banks outside the euro area. we live in times of rapid change in the way financial business is conducted around the world. the application of technology to banks and other financial companies is revolutionizing the market. 11 supervisors need to look forward as visco ( 2018a ). cgfs ( 2018 ), panetta ( 2018 ), visco ( 2018b ). much as they can.

the troubled bank still has a net value, it is possible to look for market - based solutions and hence to reduce the burden borne by the deposit protection system or the public finances. the proportion of troubled banks subjected to restructuring that were liquidated rose from 6 to 16 per cent between 1990 and 1997. in terms of their assets, the ratio rose from just a few percentage points at the beginning of the decade to 11 per cent in 1997. the potential for the development of the financial sector, in both quantitative and qualitative terms, that the italian economy requires and that it can achieve is considerable, probably greater than in most other european countries. the bank of italy remains committed to ensure, with the instruments the law provides, that this further development takes place in a competitive environment and in conditions of greater efficiency.