not been fully learned, means there are still obstacles to cross - border banking. in europe, we have gone one step further in ensuring that banks in the euro area are supervised according to one approach – an essential part of the response to the crisis was to create a single supervisor for the euro area. the single rulebook forms the basis for this supervision. but this rulebook is not as single as supervisors would like. there are still some important areas in urgent need of harmonisation, not only to ensure a level playing field, but also to promote cross - border banking. 1 / 2 bis central bankers'speeches i will mention just a few : fit and proper rules are not harmonised at all. many crisis - related supervisory competences are not harmonised. there are still some options and national discretions open to member states, which means banks can be treated differently for reasons other than the underlying risks. we see that cross - border banking has recovered elsewhere but not in europe. european banks still lag behind in this respect. in part, this is also due to ring fencing, which limits banks ’ ability to freely move liquidity and capital within groups in europe. i understand that taking the first step in eliminating ring - fencing is daunting. host country supervisors fear being left to foot the bill of costly crises. for small economies, or large economies with a large number of foreign banks, this is a challenge. but it is a challenge we need to find a common solution to. and we need to find this solution before the next crisis hits. 2 / 2 bis central bankers'speeches

being. it is important for us economists to be humble when forecasting the future. debating concepts such as ‘ secular stagnation ’ may be fashionable now, but we should remember only a decade ago it was fashionable to debate the ‘ great moderation ’. by the same token, the observed 2 / 7 bis central bankers'speeches resilience of a moderate economic recovery and strong confidence indicators should not lead to complacency. respondents to survey questions can be influenced by what they consider to be a normal benchmark. if the new normal after the great recession is below its pre - crisis level, the same levels of confidence indicators can point to lower growth rates than before the crisis. 3 indeed, measures of capacity utilisation are high in an environment of persistent economic slack. how resilient the recovery really is to policy uncertainty is also not known. the world bank ’ s global trade watch4 report suggests that policy uncertainty is already weighing on world trade. of course, uncertainty about the future has always been with us. the incidence of natural disasters such as droughts, floods and earthquakes, the doubt of whether contractual promises will be honoured and the fear of your possessions being taken by force are all factors that can affect economic activity. humankind, over the millennia, has put in place various mechanisms to help cope with uncertainty. for example, putting in place narratives to filter and process the vast array of information available and arrange it in order – a cognitive trick to make sense of an uncertain world. building institutions has been key to providing economic stability. inclusive institutions are essential for economic development. 5 the importance of economic narratives following financial crises, political uncertainty is often elevated. according to a recent study, 6 votes for extreme parties can increase by on average 30 %, while government majorities shrink, parliaments end up with a larger number of parties and become more fractionalised. thus the political landscape becomes more gridlocked at precisely the moment when decisiveness is typically required. this can delay necessary policy responses, such as cleaning up the financial sector, which prolongs the post - crisis recovery. and such uncertainty, reflected in the media, can gradually build a narrative of doom and gloom around the economy or around the existing institutions – a seeping pessimism, which over time alters investors ’ and consumers ’ expectations, and thereby their behaviour. robert schiller7 has recently elaborated on the epidemiology of narratives relevant to economic fluctuations, ranging from the great