that cannot be recouped from the failing firm itself. to avoid pro - cyclical effects, such assessments should be collected over time. establishing a resolution regime with these characteristics is, i would suggest, one of the most important financial regulatory reforms for every country that does not already have such a mechanism in place. it would lend substance to the idea that market discipline can be a solid third pillar of financial regulation, along with stronger prudential requirements and improved supervisory oversight. still, as is implicit in the foregoing discussion, an untested regime will probably not acquire complete credibility until it is actually applied successfully. for this reason, among others, it is important to ensure that other regulatory tools will help compensate for the uncertainties associated with an essentially untested mechanism. international efforts on resolution issues the looming or actual failure of a large, internationally active financial firm inevitably complicates the already challenging process of resolution. mismatches in the amounts and maturities of assets and liabilities held by the firm in the various countries in which it operates can lead host governments to take special action to protect the interests of depositors and creditors. and different insolvency regimes apply to separately incorporated subsidiaries across the world. some of those regimes may be substantively inconsistent with one another, or may not account for the special characteristics of a large international firm. a natural response, which one can find peppered through various law journals over the years, is to propose an international treaty that would establish and harmonize appropriate insolvency regimes throughout the world. just to state the proposition is to see the enormous hurdles to its realization. the task of harmonizing divergent legal regimes, and reconciling the principles underlying many of these regimes, would be challenge enough. but an effective international regime would also likely require agreement on how to share the losses and possible special assistance associated with a global firm ’ s insolvency. despite the good and thorough work being undertaken in both the basel committee on banking supervision ( basel committee ) and the financial stability board, we must acknowledge that satisfyingly clean and comprehensive solutions to the international difficulties occasioned by such insolvencies are not within sight. 2 it would certainly be useful if jurisdictions could at least broadly synchronize both standard bankruptcy and any special resolution procedures applicable to a failing financial firm. but even this significant advance would not settle many of the nettlesome problems raised by a cross - border insolvency. it thus

yves mersch : interview in wall street journal interview with mr yves mersch, member of the executive board of the european central bank, in wall street journal, conducted by mr brian blackstone and mr tom fairless and published on 1 february 2016. * * * over the last few months we ’ ve seen oil and commodity prices bringing down inflation. how worried should the ecb be about this, or is it providing the economy with a stimulus? the whole issue is how you see it on the time axis : is it a temporary, exogenous phenomenon where you can look through it, or are you to be worried that over a longer period you have second - round effects and a dis - anchoring of inflationary expectations. there are obviously some positive effects from low oil prices. it gives many companies additional leeway to invest or repair their balance sheets. all in all this is also a signal which is pointing to future resilience of the moderate pace of recovery. how much should the ecb respond to deviations from its target of just below 2 %, when it ’ s being driven by oil? is there a danger the ecb is reacting too mechanically to deviations from its target? let me first put things straight : i do not consider that we have an inflation target. we have a quantitative definition of price stability over the medium term and we assess the risks to price stability according to our two pillars, the real economy and the monetary pillar. we see that both pillars show a lot of positive developments. there is resilience in output, and there is reduction of slack in the economy and the labor market. but overall there is still slack in the system. then we see this is happening in an environment of abnormally low inflation. we will probably move into negative territory from spring until early summer if we mechanically adjust our projections. this brings us into a zone of discomfort. we have not precisely defined what we understand as medium term, but it is not necessarily equal to our projection horizon. for example some of our measures that we have decided in december will last until 2019. the reinvestment and the liquidity effect of the recalibration in december will exceed three years. we will be seen in the category of flexible inflation targeters but not inflation targeters where we have a point landing promised on day x. does this indicate a hesitance about doing more in march? no, each time we meet, we assess the economic situation. and each