pentti hakkarainen : welcome more common and integrated financial markets opening remarks by mr pentti hakkarainen, deputy governor of the bank of finland, at the nordic capital markets forum seminar on european banking union, helsinki, 5 october 2015. * * * ladies and gentlemen welcome to the bank of finland ’ s money museum. it is a great pleasure for me to open and participate in your seminar on the european banking union. without going into detailed argumentation, it is quite an indisputable view that fully integrated financial system would bring invaluable benefits to the real economy in europe. the banking union is an essential part of the financial system. however, there are also capital markets and payment services, clearing and settlement systems and other finance market functions, which are elements for further integration. in these fields a lot of progress has been made in europe in recent years. i would like to share with you some experiences of the banking union and then some views on the new action plan of the capital markets union. banking union the latest financial crisis made it very clear that interconnected banking and financial markets require a better and stronger institutional framework that we had in europe. new institutional arrangements for bank supervision and resolution were needed to match the integrated structures of banking business. as a part of the economic and monetary union and as a remedy for future financial crisis, the eu leaders agreed in june 2012 on creating the banking union. in the future, the banking union will help us resolve banking problems while avoiding using taxpayers ’ money for bailouts. the banking union also means a more stable financial system in europe as the likelihood of problems is reduced. the single rulebook provided the foundation for the banking union. it is based on the idea of harmonised regulatory requirements, such as capital adequacy rules for banks and supervisory practices. single supervisory mechanism ( ssm ) one of the main pillars of the banking union is the single supervisory mechanism ( ssm ). it ensures consistent, non - biased supervision in all member states. the single supervisory mechanism started supervision nearly one year ago and its work is independent and separated from the ecb ’ s central banking activities. from the banks ’ perspective, the introduction of the ssm means numerous changes. i will mention only a few of them. for cross - border banks, operating in multiple countries within the banking union, the ssm effectively simplifies their contacts with the authorities. a bank will work with a single supervisor and operate following a single

the future. the bank - sovereign - nexus is a two - sided problem. the nexus from banks to sovereigns is dampened through the introduction of the srm and the bank restructuring and resolution directive. however, the dampening of sovereign risks to banks has not been resolved yet. up to now there have been some discussions about potential risksensitive capital requirements regulation for sovereign bonds. that is s one way forward, but i would also support the five presidents ’ initiative to review the treatment of bank exposures to sovereign debt, for example by setting large exposures limits 1. as i said in the beginning, well functioning integrated financial markets are invaluable for the real economy and there is a lot of preparation underway. as you all here present are in important, key positions in financial markets, i call for your active participation in and providing your valuable contribution to these consultations. with your input we can improve our work in creating deeper, more liquid, better integrated and increasingly safe capital markets. thank you for your attention! completing europe ’ s economic and monetary union. report by jean - claude juncker in close cooperation with donald tusk, jeroen dijsselbloem, mario draghi and martin schulz. european commission, 2015. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches