by basel iii. second, the european banking authority estimates that, for eu banks, the final basel iii package will lead to an aggregate tier 1 capital shortfall of €34. 4 billion. is that a lot? in 2016, the largest banks in the euro area earned €50 billion – net, after taxes, and in a difficult environment. also, the capital shortfall refers to the end of the transition period, which is nine years away. most banks should be able to earn their way out of potential shortfalls. to sum up, basel iii preserves risk sensitivity in a sensible way. at the same time, banks will be able to handle its impact and, in the long run, they too will benefit from a more stable banking system. thank you for your attention. 3 / 3 bis central bankers'speeches

in which we need to work to ensure that the resolution regime is as good as we can get it concerns the whole area of safeguards. there is a natural tension between the desire for precision in defining the protection of property rights at a very detailed level and the need for flexibility in a regime that has to be able to react to the situations that come our way. we don ’ t get to choose the problems we face. i recognise that tension. i don ’ t have a radical plan for changing the current regime, but i recognise that we have to keep a very careful eye on striking the right balance between having the discretion to deal with problems and ensuring that banks and markets know as much as they can about what we would, and would not, do in a resolution. this is why the code and the liaison panel are important parts of the machinery. the third area in which more work is needed concerns information and advance planning. in recent years the bank has been forcefully arguing the importance of information gathering to the government and fsa. in my experience resolution work is like icebergs – i don ’ t mean that in the sense that banks are about to hit them. it is like icebergs in the sense that a vast amount of the work done is beneath the surface, hidden from view. because resolution is an invasive form of surgery, it requires a very large amount of information to be carried out safely. moreover, the planning work has to be done quietly, out of sight in order to avoid fuelling the failure of the bank, and it needs to start well in advance of the actual resolution weekend. as the authority responsible for resolution operations, the bank of england faces a tension. in the ideal world, we want to work closely with the management of the bank to plan a resolution, at a time when it remains a contingency option that management naturally wish to avoid. but we also have to avoid the sense that a bank is receiving the attention of the undertakers. a very important development here will be the production and maintenance of resolution plans, as part of the overall recovery and resolution plans, or living wills. i spoke on this subject last week, and the text is available on the bank of england website, so i am not going to labour the point today. but the general principle is that resolution is a very information hungry activity. to give an example, the fdic in the us has recently adopted a rule requiring deposit takers to provide detailed information on their derivatives