a vital imperative ladies and gentlemen, the fsb report is focused on resolution, and i think we can all agree that resolution is a state that we need to avoid as far as possible. in this context, i would like to emphasise the importance of taking a holistic view of the clearing ecosystem. especially now that we are entering the digital age and new technologies such as artificial intelligence, cloud and quantum computing and decentralised finance could open up new opportunities for the clearing system. but they also pose new risks. the nature of ccps as key cornerstones of our financial markets in a very tight web of interdependencies points us towards the solution : trust and close cooperation between regulators and market participants. not only between supervisor and ccp but also among and between affected stakeholders such as clearing participants, clients and associated fmis ; not only at national but also on an international level ; not only among supervisors for times when it's " business as usual " but also with recovery and resolution supervisors and overseers. the crisis management groups introduced by the fsb for ccps that are systemically 3 / 5 bis - central bankers'speeches important in more than one jurisdiction are an excellent example of exactly the kind of collaboration that i am talking about. in the same vein, but taking things a step further, i would like to highlight the approach that we are applying in the european union with the supervisory emir colleges, now complemented by the recently implemented resolution colleges. participants in resolution colleges come from various domestic and foreign authorities, such as the supervisory and resolution authorities of the banks affiliated with the ccp and the supervisory authorities of the exchanges and trading venues for which the ccp provides services. in this forum many different perspectives come together to map the possible consequences of a ccp's default and contribute to the crisis resolution strategy. the international interconnectedness of ccps requires this kind of proactive approach, a set - up for sharing information and exchanging views. fora, such as today's wfe event, help to expand and optimise our understanding and contribute to our collective toolbox. 5 closing remarks with the new fsb toolbox, we will enrich our capabilities. having a decent and comprehensive kit of tools means that we are better prepared to keep the clearing ecosystem in tip - top good shape. our commitment to optimising the clearing system is an ongoing journey. we all know there is no " one - size - fits - all " solution.

naturally depends on who these creditors are – if they are other financial institutions, the chances are high that regulators will shy away from resolution. within the framework of the financial stability board, work is ongoing at the global level to define a minimum standard on liabilities in terms of both quality and quantity that are eligible for bail - in. in order to tackle the issue of contagion, this standard should discourage other financial institutions from holding these liabilities. european commission ( 2013 ), “ the euro area ’ s growth prospects over the coming decade ”, quarterly report on the euro area 12 ( 4 ). bouis, r and r duval ( 2011 ), “ raising the potential growth after the crisis : a quantitative assessment of the potential gains from various structural reforms in the oecd area and beyond ”, oecd economics department working paper no. 835. bis central bankers ’ speeches the euro area already has a minimum requirement for such eligible liabilities. but so far, these liabilities can be held by other institutions without restriction. in the interest of financial stability, europe should lead the way and change this. resolution is obviously only the last line of defence against a bank failure. higher bank equity is the first. basel iii with its more stringent requirements reduces the likelihood that losses will run a bank into trouble. and as the banks ’ shareholders have more “ skin in the game ”, their risk appetite should moderate, which reduces the likelihood of losses in the first place. the new capital requirements are not exactly loved by bankers. their argument is straightforward : equity is expensive. this is undoubtedly true. but as franco modigliani and the university of chicago ’ s merton miller already pointed out in the late 1950s, in theory, the total cost of a bank ’ s capital stems from the riskiness of its assets, not from the composition of its liabilities. this theorem, however, obviously does not hold today, and mainly for one simple reason. interest on debt is tax - deductible ; pay - outs on equity are not. how sensitive are banks to this difference in tax treatment? a study3 by imf economists suggests that they are as sensitive as any other firm. what does this imply for the leverage of banks? imf economists estimate that abolishing the preferential tax treatment of debt would raise average unweighted bank equity by 2. 2 to 4. 2 percentage points. even though the authors caution that the effect is likely to be lower