the initial problems primarily concerned the greek government debt market, contagion and spillover effects meant that the crisis quickly spread to the sovereign debt of other so - called “ peripheral ” countries and other market segments. in particular, financial markets turned their attention to the solvency of some “ peripheral ” economies that were perceived to have been hit particularly hard by the crisis because of long - standing structural and institutional weaknesses. the deterioration of public finances in some euro area member states has impacted negatively on investors ’ confidence in government bonds issued by these countries, and thus led to further turbulences in the financial markets. this is also reflected in the sharp increase in the yields on the government bonds issued by those countries. this additional distortion has given rise to further instability in the financial system, both directly and through its interplay with the weaknesses of the public sector. given the central role played by sovereign debt in financial markets, its dysfunctional behaviour threatened both financial stability and the transmission of monetary policy. in this context, the eurosystem launched its securities markets programme ( smp ), which entails the outright purchase of debt instruments to address the malfunctioning of securities markets and to ensure the proper transmission of monetary policy impulses to the wider economy and, ultimately, the general price level. in addition, in order to mitigate the impact of the sovereign debt crisis on the banking sector ’ s ability to refinance its activities, the ecb temporarily reversed the phasing - out of its nonstandard measures. it also took collateral - related measures to support access to central bank liquidity by banks located in the countries that were committed to implementing economic and financial adjustment programmes negotiated with the european commission, in liaison with the ecb, and the imf. there is no denying that the financial crisis has put the euro and the economy of the euro area to the test. during the crisis the euro area public authorities have proven their capacity bis central bankers ’ speeches and willingness to take the necessary emergency steps to maintain financial stability. however, the crisis has clearly shown the need to undertake a number of reforms in order to address some institutional and structural weaknesses in our economies. this is essential in order to map out the way forward for the european monetary union, which i will now briefly sketch. iii. the way forward the way forward for the euro area and the eu requires a number of initiatives in key areas in order to guarantee the public authorities ’ ability to continue delivering macroeconomic and financial stability. in

to reduce disclosure requirements, simplify reporting, and exempt some institutions from recovery and resolution planning, among other things. so what ’ s the global state of play in matters of banking regulation? one major step forward – the finalisation of basel iii – has already been taken. the next, equally important step lies immediately ahead of us – full implementation of these rules. during implementation, we should bear in mind that basel standards are minimum, not maximum standards. nevertheless, they are designed for the global players, and simpler rules are called for where small and regional institutions are concerned. importantly, this principle of proportionality must not be mistaken for a loophole allowing lax implementation or even deregulation. 3. regulation in europe : building the banking union now that you know my take on the global state of play, let ’ s move on to the european level. like in many other regions, our main focus in europe since the onset of the financial crisis has been on improving our regulatory framework and supervisory architecture to get rid of the gaps and loopholes uncovered by the financial crisis. we did this knowing that we can never make the system entirely crisis - proof, but that we have to do all we can. one major outcome of this process in europe was the establishment of the european banking union. november 2014 saw the launch of the common banking supervision arrangement – the single supervisory mechanism. at the beginning of 2016, it was joined by the second pillar responsible for the recovery and resolution of credit institutions – the single resolution mechanism. the banking union started with a great deal of momentum, and we can say without hubris that we have built up quite a lot from scratch within a very reasonable timeframe. 2 / 4 bis central bankers'speeches however, there are still some gaps in the banking union ’ s architecture. the banking union, and with it the euro area, requires further reform. europe ’ s heavy reliance on the banking sector stands out as one major reason why we need to make it more resilient still. the most prominent proposal put forward in this context is the erection of a third pillar for the banking union, namely some form of european deposit insurance scheme – or edis, for short. it is a hotly debated topic these days, and rightly so. strong deposit insurance is essential to reassure depositors and thus prevent runs and contagion. therefore, it certainly makes sense to think about ways to shore up this backstop in europe. that said, you will probably be aware