are avoided. all of this is a major project and quality should not be compromised to the detriment of speed. i expect the ssm to start its operation in the second half of next year. i am certain that the ssm will be a reliable partner for us regulators and supervisors. therefore, in my view, the ssm deserves just as much trust as us supervisory authorities are granted by their transatlantic partners. bis central bankers ’ speeches planning for the second critical institution in a banking union, the common resolution framework, is less advanced. ideally, the single resolution mechanism would be in place at the same time as the ssm. however, it looks as if this is unlikely to happen. things are still in flux. for a start we will probably have a network of national arrangements with national resolution authorities and national resolution funds endowed by the banking industry. these national institutions will have the same design and will apply common rules. but as we all know : banking is global. when it comes to supervision – and particularly resolution – of large international banks, it will not be enough to have a european framework. global financial markets call for global regulations. coordination and cooperation with other jurisdictions – especially the us –, therefore, is of the utmost importance. the goal must be to head towards a more international, not towards a more national approach. by implementing a global level playing field, we have to avoid regulatory arbitrage likely to result from different regimes. we should keep in mind that the success of the g20 reform agenda for strengthening the resilience of the global financial system hinges upon the consistency of various initiatives. there are two different aspects. the first is cross - sectoral consistency. that is why it ’ s so important to keep shadow banking on the agenda. the second issue is consistency between the rules in different jurisdictions. that is exactly why international cooperation is of such high importance when reforming the financial sector. but let me get back to the european reform agenda. even a european banking union based on sound institutions will not be able to meet expectations if it is not underpinned by prudent macroeconomic policies. many european countries are currently making progress in cutting public expenditures, strengthening competitiveness, and improving their current account. they very much have to hold their course, since there is no alternative to those efforts. structural reforms are essential to bring back growth. central banks : the “ only game in town ”? some expect central banks to be the ones that can bring back growth.

right way to respond to the increasing volume and volatility of international capital flows, and especially attitudes to capital controls. many emerging economies point to the need for a policy mix that is tailored bis central bankers ’ speeches to their country ’ s specific economic and financial structures in order to protect internal price stability and financial stability against the consequences of large capital inflows and sudden stops. the range of measures deployed is correspondingly broad. some countries intervene on the foreign exchange markets, others resort to interest rate cuts in order to discourage capital inflows, another group focuses mainly on macroprudential measures in a bid to strengthen the ability of their domestic financial systems to absorb inflows, while yet other nations mainly or partly employ capital controls. this broad variety of national responses inevitably begs the question of whether and to what extent they are consistent with global financial stability. greater cooperation, for instance through a ( non - binding ) framework or guidelines both at the national and the global level, might be a more effective way of safeguarding financial stability. moreover, it has to be further clarified whether an incorporation of capital flow management into the surveillance mandate of the international monetary fund could contribute to better outcomes on the global level. as jaques de larosiere recently highlighted : an international monetary system worthy of the name should ensure that national interests and measures lead to globally stable solutions. in my view, this is much the same way that, in a market economy, the sum of individual decisions should add up to a rational macroeconomic whole. it is well known that germany is a firm proponent of a free movement of capital. this position is not anchored in its general belief in a market economy but also reflects its own past experience with capital controls. as an export nation, germany was particularly interested in rapidly achieving full convertibility of its own currency. it has completely liberalised its capital exports back in the early 1960s. however, it proved impossible to sustainably liberalise capital imports in the same way. operating within a fixed exchange rate regime, germany on several occasions imposed temporary restrictions on capital imports in response to large speculative capital inflows during the 1960s and early 1970s. this measures aim of assuring the effectiveness of the bundesbank ’ s monetary policy with its primary objective of safeguarding domestic price stability. several emerging market economies are currently in a comparable situation to that of germany in the 1960s and early 1970s, in particular in terms of the state of development of their financial markets. however, looking back at