in 2014. that is quite a demanding timetable. i can well understand the need to speed things up as much as possible as the new system should already be being used to help solve the problems the euro area is facing now. that includes the possibility it will open for direct recapitalisation of financial institutions requiring public aid by the european stability mechanism, thereby helping to mitigate the destabilising association of sovereign and financial risk. bis central bankers ’ speeches it is probably reasonable to expect that the overall supervisory framework should evolve over time beyond january 2014. in particular the distribution of responsibilities between the centre and the national authorities could naturally change as a result of the accumulation of expertise in the ecb and the progress made in developing the other two pillars of banking union : namely, an integrated resolution regime and a common deposit guarantee scheme. indeed, the idea that a fully effective banking union requires also the establishment of those two additional components is quite compelling in my view. moreover, it could be argued that the combination of a centralised supervisory mechanism with decentralised resolution schemes may generate some dysfunctionalities and incentive compatibility issues. more importantly, the mitigation of destabilising financial risks and of their impact on sovereign risks requires not only a strong crisis prevention scheme, but also an effective common crisis resolution regime. even if banks are supervised under a common system, episodes of financial distress may still deteriorate the perceived cohesion of the eurozone if purely domestic mechanisms are used to restructure or resolve weak banks and to protect depositors. that is conceptually contradictory with the goals of a banking union. in that context, the communication by the commission to shortly make legislative proposals in this area above and beyond the directives which are currently under discussion is obviously welcomed. in any event, there is a lot of work to be done in the short term to put in place the new unified supervisory mechanism. at present, important differences remain between the characteristics of the national supervisory models which affect powers, means, practices and procedures. the use of permanent on - site supervision, the link between off - site supervision and on - site inspections or the powers of the supervisory authority ( if any ) in relation to accounting regulations, are simply some examples. differences between national supervisors also exist regarding the availability of data. to give you an example, central credit registers – which in our experience are a highly valuable source of information for prudential supervision purposes – are not yet available in all jurisdictions. the eba

has played a very important role by improving cooperation between national supervisors and promoting supervisory convergence. but these improvements fall short of the needs of an effectively unified supervisory system. substantial and swift progress in this field is therefore needed. let me just finish by making a general comment. it is obvious that the creation of a banking union poses enormous challenges for europe that will require strong political support and effective cooperation among all authorities involved. the good news is that if we look at the process of european integration from a historical perspective, we realise that this is not the first time that the way forward has been highly complex. and, past experience has regularly shown that the response has always been to deepen integration and increase the transfer of national powers to the union as the best – and possibly only – way to preserve all the achievements made so far. bis central bankers ’ speeches