##s to a unified assessment scheme. the asset quality review has given us a deeper insight into the banks ’ bis central bankers ’ speeches procedures, thereby making it possible for us to check which differences between banks are justified and to ascertain where we need to probe critically. we will use the knowledge that we have obtained through the peer group review for other supervisory activities as of 4 november. thus far, these processes have been carried out at the national level. we are now going to harmonise them throughout the euro area, thereby making it easier to compare the respective risk situations of banks, thus enabling us to target our supervisory activities better. federal structure – central decision - making critical voices have warned us in the past about losing sight of the diversity of the european banking sector and wanting to typify a “ european ” bank. i admit that, in the process of harmonising and centralising decision - making powers, there is always also a danger of seeing everything at par. the ecb is, however, protected from such developments by institutional barriers. as national supervisory authorities participate in the supervisory process, the ecb remains close to regional market and banking structures. moreover, the ecb ’ s staff will take a keen look at the business models and risk profiles of each directly supervised bank. the kick - off meetings, which have been taking place since early summer between the current supervisors, the ecb and the banks, are simply a first step. in this connection, allow me to stress the inherent dangers in supervision not only of being too far removed, but also of being too close. other viewpoints and new supervisory approaches and methods may sharpen our perception and mitigate the danger of accepting a bank ’ s unjustified customs merely because they have long been familiar to us. the comparisons and analyses i referred to earlier will also help to counter this danger. but that is not all. we will also address this issue in terms of our staffing policies. the head of a joint supervisory team ( jst ) must come from a different country to the country in which the institution it is supervising is established. in concrete terms : the head supervisor for deutsche bank will be a french lady ; bnp paribas will be supervised by an italian man. in addition, there will a rotation of staff members among the jsts. all in all, this will not only enable us to reach more objective judgements about a bank, but will also foster the development of a common supervisory culture. banking

headline inflation are likely to hover around current levels in the coming months. measures of underlying inflation remain subdued and have yet to show convincing signs of a sustained upward trend. muted wage dynamics are one important element keeping a lid on underlying price pressures. these are shaped by many factors. in addition to weak productivity developments, the significant degree of remaining labour market slack is limiting wage growth. when assessing slack, it is important to look also at broader measures than the unemployment rate. the so - called “ u6 measure ” captures unemployment, underemployment ( meaning workers who would like to work more hours ) and marginal attachment, which refers to those members of the workforce who are not seeking employment very actively either because, for example, they are not available to start a new job at short notice or have been discouraged by a fruitless search for work. the u6 measure currently covers around 17 % of the labour force and is thus considerably higher than the unemployment rate. 5 looking forward, although there still appears to be a disconnect between growth and inflation, the ongoing economic expansion is expected to further contribute to a narrowing of the output and unemployment gaps. as slack in the economy continues to be absorbed, price pressures will gradually build up and the traditional phillips curve relationship between inflation and the business cycle should eventually reassert itself. that being said, current estimates still appear to point to a flatter slope of the phillips curve than in the past, which could be interpreted as an indication that the relationship between economic slack and inflation has weakened. this weakening might be partly the result of a mismeasurement of slack ( because of structural changes in the labour market ) or an unstable relationship between slack and inflation over time. at the same time, this effect could also result from discrete parallel shifts in the phillips curve. such parallel shifts can arise due to temporary changes in wage and inflation mark - ups or an incipient dis - anchoring of inflation expectations, which is of greater concern to a central bank. empirically disentangling these factors is extremely difficult, so we need to be mindful of such considerations when discussing the relationship between economic slack and inflation developments. our primary task as a central bank is to ensure that the traditional relationship between the real and the nominal sides of the economy reasserts itself at a steady - state rate of inflation that is below, but close to, 2 %. we have not yet accomplished our mission : with inflation convergence proceeding only 2 /