bank supervisors would over time lead to a type of “ collective supervisor ” that would act as effectively as if there were a single supervisor. this would also desirable, he added, because it would “ assist the eurosystem in the performance of its basic tasks ”. document number 17812 / 12, as published on the council of the european union ’ s website, http : / / register. consilium. europa. eu. bis central bankers ’ speeches analyses, be they micro - prudential or macro - prudential, would further enhance the breadth, depth and granularity of information about the functioning of the banking sector. the value added of this information will become even more critical in a crisis, given the important role of banks in severe financial crises and the nature of the data concerned. moreover, analytical supervisory assessment indicators and early - warning tools can put the new data to work in assessing credit developments. 7 additional information on the banking sector is likely to be more important in the euro area than in the us, because in the euro area bank lending accounts for almost two - thirds of the total financing of non - financial corporations, whereas in the us bank lending is only just above one - quarter of total firm financing. broader information basis for assessing monetary policy options given europe ’ s bank - based financial structure, monetary transmission channels through the banking sector are particularly important in understanding the effects of monetary policy actions, standard and non - standard. for example, a key feature of the present crisis is the impairment of the monetary transmission mechanism in which fragilities in banks ’ funding models and their exposure to government debt have played a significant role. a thorough understanding of banks ’ behaviour and health across jurisdictions facilitates the design and implementation of non - standard monetary policy measures and will also facilitate the exit from these measures when the time is right. better consideration of the interactions between monetary, supervisory and regulatory policies monetary policy interacts with supervisory and regulatory policies, be they micro - prudential or macro - prudential in nature. if the monetary policy objective and the supervisory objective are distinctly defined and separate instruments are assigned to each of them, then a single institution could take the interdependencies better into account than separate authorities. interactions can be expected to occur in particular with macro - prudential policies, which increase in importance due to the lessons from the crisis, and operate through channels closely related to monetary policy transmission. the allocation of macro - prudential regulatory instruments under the ss

has considerable downside risks, so the direction of financial stability and price stability actions ( e. g. to repair a broken monetary transmission mechanism ) typically go in the same direction and a conflict between both policy branches is rather unlikely. the draft legislation also confirms that the other statutory tasks and objectives of the ecb remain unaffected by the ssm, implying that monetary policy will continue to be conducted by the governing council in full independence, with the primary objective of maintaining price stability over the medium term. with our quantitative definition of price stability, it will be easy to verify every month that inflation expectations remain well anchored, as they are today. it is hard to see how financial stability dominance over monetary policy could occur if such precautions are taken. examples from this literature are heller ( 1991 ), prudential supervision and monetary policy, in frenkel, j., and m. goldstein ( eds. ), essays in honor of jacques j. polak, international monetary fund ; c. goodhart and d. schoenmaker ( 1992 ), institutional separation between supervisory and monetary agencies, giorn. econ. 9 ; c. goodhart and d. schoenmaker ( 1995 ), should the functions of monetary policy and banking supervision be separated?, oxford economic papers 47 ( 4 ), 539 – 560 ; and di giorgio and di noia ( 1999 ), should banking supervision and monetary policy tasks be given to different agencies?, international finance 2 ( 3 ), 361 – 378. s. gerlach ( 2013 ), banking and fiscal union, introductory remarks at a panel session at the eui conference on “ the state of play in the euro area – fixing the emu for the long term ”, florence, 21 january. this argument is put forward by m. brunnermeier and h. gersbach ( 2012 ), true independence for the ecb : triggering power – no more, no less, voxeu, 20 december. european central bank ( 2012b ), opinion of the european central bank of 27 november 2012 on a proposal for a council regulation conferring specific tasks on the european central bank concerning policies relating to the prudential supervision of credit institutions and a proposal for a regulation of the european parliament and of the council amending regulation ( eu ) no 1093 / 2010 establishing a european supervisory authority ( european banking authority ), con / 2012 / 96, and european central bank ( 2012c ),