of organisation and decision making. the ssm will have a carefully calibrated governance structure, involving a supervisory board that interacts with the ecb governing council. at the bottom of the system will be the various national supervisors each feeding up dozens if not hundreds of issues and matters for decision and action, with this volume surging in times of stress. my instinct is that the volume of these decisions is considerably greater in supervision than in monetary policy. it will therefore be important that clear and efficient decision - making procedures, with clear accountability, are put in place. second, it is important that supervisory practices and procedures converge quickly into a common approach. such integration is not easy and will take time, as i know from the fsa which involved the merger of nine and then a tenth organisation into one. in the case of the ssm, we will have at least 17 supervisors from different cultures to meld together. developing a common framework for risk assessment, with a common language for risk and common approaches to inspection and supervisory reviews, will be a process that forges this integration out of necessity and will involve some important early practical design questions. bis central bankers ’ speeches third, and closely related to this last point, it will be important to develop a common supervisory philosophy and risk appetite. will the ssm under the ecb be a principles based supervisor, a rules - based one or some judicious mix of the two? will staff be encouraged – and firms warned to expect – an intrusive approach or not? it is important to articulate the essential elements of the supervisory approach so that front line staff – and the banks they supervise – have a clear understanding of senior management expectations and risk appetite. i would like to see the new single supervisory mechanism give its front line staff a clear mandate to be challenging and assertive with banks in ensuring that risks are not just identified but are definitively mitigated in a time - bound manner. work is underway at the ecb and the national supervisors to start to put these practical building blocks in place. but we have a very tight timeline and much remains to be done. i look forward to the discussion to come on these and the other matters posed by the introduction of the banking union. bis central bankers ’ speeches

ensure as far as possible that risks to the financial system as a whole are minimised. insofar as the bank examines individual customer accounts, its focus is always on the solvency of the institution. our main attention is focused on the quality of loans and other assets and good management. we frequently come across breaches of the rules. many of these would be of a minor nature. most are dealt with by administrative action. we discourage applications for banking licences unless we are fully satisfied as to the status of the applicant. no system of supervision, however comprehensive, can give a one hundred per cent guarantee against abuse. effective supervision requires the co - operation of the entity that is being supervised. despite the improvements in controls, and international co - operation, bank failures continue. the ultimate objective worldwide is to avoid systemic problems. arising from the tribunals of inquiry and other recent developments, there has been some confusion about the confidentiality exercised by the central bank in relation to its functions. may i say at the outset that we are co - operating to the fullest extent possible with tribunal investigations. members are aware that the central bank is conducting an investigation following recent allegations against national irish bank. i am precluded from discussing individual cases. the bank is bound under law, to observe strict rules of confidentiality. it may not disclose information about individual entities or persons to any third parties, other than in exceptional circumstances. these include criminal proceedings in court, providing information to the gardai on money laundering and other criminal activity, including tax evasion, and transfer of information to other regulatory authorities. the bank is prohibited from communicating information to the revenue commissioners. we are not tax investigators. it is the duty of individual financial institutions to report to the gardai suspicions of criminal activity ( including tax evasion ) by their customers. i understand that such reports to the gardai are not infrequent. if we become aware of tax abuse, by an institution that we supervise, it is our duty to notify the gardai. these requirements derive from and are consistent with european union laws. other banking supervisors in the european union are subject to similar confidentiality requirements. our situation is in no sense unique. if the irish authorities attempted to abandon these requirements, not only would we be in breach of eu law but we would forfeit the co - operation of other supervisors in exchanging information. this exchange of information is vital. without it, we simply could not operate as