not be able to attract everything they need from the markets. that ’ s why extra backstops are necessary. the first one that comes to mind is a national backstop because we ’ re dealing with legacy burdens. some countries however do not even have a national resolution system. and there are countries that have limited means. should we then jeopardise the whole exercise, an exercise which is supposed to restore confidence in the system? germany is very clear about this … the banking union is also about democracy. the voters say : we do not want to save the banks for a second time with taxpayer money. and that ’ s why we also need a bail - in system where it is first and foremost the banks ’ shareholders and creditors that foot the bill. we should not wait until the bail - in instruments are available in 2018. the commission can already impose it now when state aid is given. everything is linked : bail - in is important but also bail - out. but a european bail - out – now only possible via an indirect bank recap through the esm – only comes as the last line of defence and is rather hypothetical. but because of its availability it will provide an element of certainty to the markets and that ’ s why it ’ s important. in such a case, the european emergency fund esm can lend indirectly to a country for a bail - out. direct recapitalisation is not available? that is only possible if supervision by the ecb has started. the problem of indirect recapitalisation is that the debt of the country in question would increase. not every country can afford this. however, the european commission has already said that countries can increase their deficit for this purpose without being sanctioned. this is a step in the right direction. are the national authorities cooperating? the relations are excellent. the motivation is very big. and the capacity to deliver results is there. we will continue to use the expertise of national authorities. bis central bankers ’ speeches and the banking sector, is there resistance there? it would be strange if there wasn ’ t. some banks are afraid of the eyes of strangers. but that is exactly what this is about : breaking the sometimes too cosy relations between national supervisors and banks. that ’ s what we want to do. for that reason we will have multinational supervisory teams. banks will be checked by the ecb and by experts from third countries. but around half of the teams will still be national. do you expect

unpleasant surprises? i am too old to exclude that. but don ’ t forget that the banks in the programme countries have already been assessed extensively. from that perspective we should expect only few surprises. however, some portfolios are very complicated and require specific expertise. take for example the shipping sector. then there is the question of how you value non - liquid assets. those are difficult discussions. but we have a european perspective in the asset quality review. the biggest surprise could come from the number of assets that has been classified incorrectly. they will then have to be revalued. will the ecb in case of capital shortfalls wait till the end of the review or try to work out a solution right away? the supervisory role of the ecb sets in only in one year ’ s time. what you see is that banks are already anticipating and cleaning up their balance sheets. how firm will this exercise be compared to the two previous ones by the eba? you refer to the stress test, the third stage of the comprehensive assessment. we are discussing this with the eba. we have already decided what the buffer requirements are for the second stage, the asset quality review. they are pretty tough. banks need to have 4. 5 % in common equity tier one ( cet1 ). we added a capital conversation buffer of 2. 5 %. for significant banks 1 % is added. then we are at 8 %, which is in substance comparable to the old capital definition. bis central bankers ’ speeches