to move to more innovative sectors. successful examples of such measures have been introduced in spain, ireland and other reforming countries. the process of private sector debt workout is also advancing. the ecb ’ s comprehensive assessment has accelerated the crucial step of acknowledging and provisioning for npls. what is now key is that, where necessary, those npls are further restructured through more efficient insolvency proceedings or removed from banks ’ balance sheets altogether. several countries have taken national initiatives to improve in - and out - of - court restructuring frameworks and establish asset management companies for npls. this could be supported at the european level by progressing with capital markets union, which should induce greater legal convergence and deepen markets for distressed debt. supporting the deleveraging process in these ways – by raising real growth and working out private debt – would provide further momentum to the recovery, while raising confidence in long - term growth prospects. but importantly, balance sheet repair also creates the preconditions to address definitively one of the euro area ’ s key institutional weaknesses : the incomplete banking union. a great deal of progress has been made in this area in recent years. with the single supervisory mechanism we now have a system of supervision that is less liable to capture or forbearance. the bank recovery and resolution directive provides a harmonised and predictable framework for private sector risk - sharing across the union. and governments are on the way to establishing a european public backstop for the single resolution mechanism. but if we are to complete banking union – notably in terms the backstop to the srm and establishing a common deposit guarantee scheme – legacy assets need first to be fully addressed. that is why balance sheet repair is pivotal. completing banking union also requires removing any remnants of the regulatory framework that implicitly support home bias. for example, how much national discretion is allowed in implementing rules ; how fungible are liquidity and capital across borders ; how regulations, such as those on loss - absorbing capital, affect the choice of subsidiaries versus branches – all these decisions will crucially shape the microeconomic incentives of banks to become european. and the macroeconomic consequences for the union are significant. conclusion to conclude, working through the aftermath of a financial cycle requires a comprehensive response. monetary policy will play its part for as long as needed, which means the full implementation of the asset purchase programme and, if necessary, adjustments to its size, composition and duration. and by meeting our objective, we support growth and inflation,

which in turn creates the conditions for interest rates to “ normalise ” once more. but monetary policy can only do so much. it is for other policymakers to address the secular and institutional factors that are preventing a stronger and more sustained recovery. efforts are now well underway. but longer they take, the higher the hurdles that all policymakers will ultimately have to climb. bis central bankers ’ speeches