area of micro - prudential supervision is the most advanced following the creation of the single supervisory mechanism. common rules are being applied to banks throughout the banking union designed to prevent the unsustainable build - up of risk, to ensure risk is treated in a harmonized way and, ultimately, to divorce the assessment of banks from the conditions that happen to prevail in a particular national jurisdiction. that these rules can then be extended to institutions not supervised by the ssm can help create a level playing field within national systems and also upgrade the quality of our less significant institutions, while concurrently recognizing that national specificities remain. however, it is also important to continue to ensure that banks are not primarily judged according to their origin and geographical presence – here the horizontal functions of the ssm have an important role to ensure risk - based approaches to micro - supervision. addressing the home - host issue is another important issue of concern. aside from preventative measures there are also the crisis management tools. here resolution is primary and that is why it is a critical pillar to ensure the smooth functioning of the banking sector. legacy issues appear to dominate here – too big to fail, moral hazard, a failure to address systemic crises where financial stability is compromised at the national level. let me suggest three priority areas. i am pleased to see that eu leaders have decided to take action in this respect and in the recent eurogroup decided to proceed with the review of the crisis management framework. and this brings me to the issue of deposit insurance schemes and their contribution to banking union. such schemes are largely seen as a simple payout function. that is indeed an important aspect of their operation. and a european scheme is surely crucial in preventing the flight of deposits that we witnessed during the euro area sovereign debt crisis in 2011 - 12. depositors fleeing domestic banking systems where the ability of deposit insurance schemes to cover potential systemic crisis brought into question the viability of national fiscal authorities, highlighs an other aspects of the bank - sovereign nexus. but deposit guarantee schemes can contribute far beyond their payout function. they can act as risk minimizers to prevent and promptly manage a crisis : 1. first, the existing framework has to become more usable. it is by far preferable to resolve banks rather than liquidate them, even where the ‘ sale of business tool ’ is used. this requires a broader interpretation of the public interest assessment from the resolution authorities, thus expanding the pool of banks which could qualify for resolution.

. hence, it has become more resilient to stand up to any further shocks. from the perspective of the us, it would expose to the corresponding backlash of tariff increase to almost the same extent. for example, the us exports to china will contract, which would undermine the interests of many us companies and lead to notable income decline of some us high - tech firms. a large number of the us companies that have been long accustomed to relying on the processing, assembly, transportation and distribution of the chinese exports for creating value added will be severely impacted, with some even face the danger of going bust. the us consumers would also pay higher costs, with the low - and middle - income people, farmers and blue - collar workers in particular, suffering more welfare losses in real terms. besides, the us has huge assets and liabilities overseas, and relies on the wall - street dominated international financial system more than any other country. a trade war will undoubtedly lead to market fluctuations and ultimately a lackluster international financial market. from the logic perspective, the us tariff increase aims to reduce trade deficit with china. but with china ’ s retaliatory measures, the forthright outcome of tariff increase could be quite murky and even counter - productive in the end with other factors considered. firstly, to put china ’ s hightech firms on its sanction list, to which the us government explicitly forbids the sale of products 1 / 9 bis central bankers'speeches and technologies by its companies, is an action of directly increasing the trade deficit by the us itself. secondly, the launch of a the trade war has sent waves to the international financial market, leading to a rapid depreciation of the renmibi, which again aroused the us government concern of compromising the effect of tariff increase. thirdly, a substantial tariff increase would inflate commodity prices, denting the advantage of a low inflationary environment enjoyed by the us economy. fourthly, the gap left by curbing chinese imports would be filled by exports from other economies, resulting in unchanged total us trade deficit. from the perspective of history, the trade frictions between the us and other rising economies have been lasting for over 40 years, such as first with germany, then japan, and later the four asian dragons. in 2000, china overtook japan as the country recorded the biggest trade surplus with the us. now, countries such as india, vietnam, indonesia, the philippines, bangladesh and some latin american countries are developing