also need to be implemented and applied uniformly. this is the job of the single resolution authority. the details of implementing the single resolution regime, which has only recently been agreed, are currently under discussion. central to this discussion is the precise detail of the bis central bankers ’ speeches levies to be paid by banks to the resolution fund, which therefore begs the question : who pays what? the target level of the fund is €55 billion, to be paid in over a period of eight years starting in 2016. how much individual banks will pay has not been definitively clarified. the european commission is working out the details at the moment. we know that some banks have riskier business models than others. that ’ s why – and this is what the legislation provides – the levies to be paid by banks to the fund include a riskweighted component in addition to a flat levy. not every bank will pay the same amount, therefore. the single resolution mechanism is intended to ensure that banks can be wound down more efficiently than in the past. this will reduce the costs of resolution and hence the potential burden on the single resolution fund. another side effect will be to reduce the urgency of having a single european deposit guarantee scheme. if banking supervision and resolution are conducted at a european level, the probability of banks defaulting should fall. if a bank still gets into difficulties, supranational structures are in place to ensure it can exit the market in an efficient and orderly manner. this exit will be conducted in line with the bank recovery and resolution directive ( brrd ). the directive envisages preferential treatment for depositors within the hierarchy of creditors, so they will have to be compensated far less often. this reduces the need for funds from national deposit guarantee schemes, which will only have to be drawn on in absolutely extreme cases. the directive on deposit guarantee schemes is itself in the process of being revised. its purpose is to harmonise national deposit schemes and provide them with more funds. this should also help ensure that national deposit guarantee schemes have sufficient funds for the time being. conclusion viewed from a historical perspective, banking union is being established very quickly, which is good news. because everyone benefits from a single financial market architecture : europe ’ s banks, investors and savers, the real economy ; and our monetary policy can also be more effective if the financial markets are less fragmented along national borders. bis central bankers ’ speeches

me state very clearly that the euro area is not a closed club. it is open to any eu member state that fulfils the convergence criteria on a sustainable basis. iv. conclusion the baltic experience demonstrates that euro membership is not just about economics. the economics alone make only for a partial analysis of the failure or success of an adjustment bis central bankers ’ speeches programme. the political motivations – such as the determination to join the euro area or to safeguard the political capital invested in emu – have often been underestimated by markets during the crisis. i firmly believe that both economic and political arguments will ultimately also prevail in countries currently in the middle of an adjustment process that is similarly painful to latvia ’ s experience. thank you very much for your attention. bis central bankers ’ speeches