recent proposal includes the possibility of setting for each bank a time margin for compliance with the mrel requirement, although this margin would be decided on a case - by - case basis by the resolution authority, i. e. the srb, in the case of the banking union. admittedly, setting a relatively long transition period may add complexity to the resolution processes that have to be managed during that period. as stated, current regulations require that resolution funds should only be activated when the institution has absorbed losses for an amount equivalent to 8 % of liabilities. evidently, if the bank did not yet have sufficient loss - absorbing debt instruments because the transition period were not over, the established requirement would only be met if haircuts were imposed on other creditors, such as deposit - holders. while the deposits covered by national guarantee schemes would be excluded from loss - bearing, there is no doubt this step might prove destabilising. thus, in the ongoing revision of the directive, it might be wise to add a flexibility clause in respect of the requirements established for the use of funds external to the banks concerned 8 / 10 in their resolution processes, at least for the duration of the transition period set for the fulfilment of the mrel requirements. lastly, before concluding this section, a remark on the need for coordination among the different banking union authorities. the current regulations and the european commission ’ s proposals for their revision afford the srb extensive discretion for deciding, case by case, on questions as important as the objective volume of mrel, the nature of the eligible instruments and the transition regime. these decisions interact appreciably with the solvency requirements set by the prudential supervisor and they give shape to a series of regulatory demands that may affect the viability of institutions and the structure of the industry. a fruitful framework of collaboration between the srb and the ssm is thus needed and, specifically, the criteria the srb develops to exercise the discretion afforded it by the regulations should be properly discussed with the prudential authority. 5 final remarks in conclusion, i have referred in my address to the intense work in all jurisdictions to amend the bank crisis management framework so that it strengthens the capacity available to maintain financial stability without this requiring the massive use of public funds, as occurred in the recent financial crisis. the progress made in europe has been considerable, having incorporated the most demanding international standards into the regulations. the new resolution regulations pose most considerable constraints, which are in

? • why save with banks? • why borrow within limits? • why borrow from banks? • why borrow for income generating purposes? • why repay loans • why repay loans in time? • why do you need insurance? • why you will need regular stream of income post working life – pension? • why you should keep money aside regularly and consistently during your earning life for pension in old age? • what is interest? how moneylenders charge very high interest rates? • what is the difference between money and credit. one of the primary challenges for improving the effectiveness of financial literacy efforts is to ensure the standardization of the basic messages being conveyed to people. this will help in ensuring consistency in the messages reaching the target audience from various sources and making it more focused and purposeful. i hope that this forum deliberates on this issue and comes up with some useful ideas on the same. for the lower and middle income groups that are participating in financial markets as either savers or borrowers or both, i. e. the financially included, financial literacy is about enhancing their knowledge about the market and about the range of products / services available for meeting various financial goals. for instance, how many people invest in equities? they lack knowledge about how the equity market functions, which gives relatively high returns over a longer time horizon as compared with other kinds of investments. for high net worth bis central bankers ’ speeches individuals, the education is useful to fetch greater returns from their investments in the market and to avail credit at relatively cheaper rates. but whether saving or investing, the basic lesson that a higher return implies higher risks cannot be lost sight of. people need to be educated to balance their investments in terms of liquidity and risks and that they should not put all eggs in the same basket. while financial literacy for the users of financial services / products is of paramount importance, literacy is also a must for financial service providers. banks, financial institutions and other market players too need to be literate about their risk and return framework. every bank, in order to expand its customer base, needs to understand the requirements of its customers, the market, credit and operational risks involved and returns to be achieved. they need to understand that for their business to survive, their customers must survive and for that, they need to understand the appropriateness of the products themselves to be able to explain it to their customers. besides, the providers of financial services have a vested interest in the spread of financial inclusion and financial literacy