research in these and other innovative areas, like green finance, will develop further and become traditional topics in central banks ’ research agenda. for this reason, i challenge our researchers to consider these trends in their future research agenda. continuous enhancement of research topics and methodologies is a must for a central bank. in this respect, i would like to thank ambassador maitre, the swiss government, the state secretariat for economic affairs ( seco ) and its bilateral assistance and capacity building for central banks ( bcc ) program for supporting research activity at the bank of albania. this 1 / 2 bis central bankers'speeches cooperation has been a significant instrument for improving our research work and exposing it to academic and international research community. our cooperation will continue in the future to improve research methodologies and products. we are currently working with seco toward the optimization and institutionalization of research agenda and research implementation in central banks. these important issues will be discussed in a jointly - organized workshop with all bcc partners on capacity building for central banks, in tirana in spring 2020. dear ladies and gentlemen, our see research workshop has become a cherished tradition for bank of albania and central banks of the see region. it is a great pleasure, and we are very happy to see that the workshop continues to generate interest beyond the see region and central banking community. the list of participants has expanded to include speakers from academic institutions in the eu, the us and south - eastern asia, as well as from international financial institutions. your participation is contributing to broadening and enriching our network and we hope that discussions will help our researchers to improve their work and strengthen their research recommendations. these days, your participation in the workshop takes another and even more significant meaning in the wake of the tragic consequences caused by the strong earthquake. it helps to show that, despite many losses, we are resilient and will continue to work to overcome the emotional and economic hardships of this tragic event, shed the desperation, fear and despair, and return to normal activity. i wish the workshop a great success, and all guests and participants a pleasant stay in tirana! 2 / 2 bis central bankers'speeches

additional burden sharing first. the hotly debated banking union is a good case in point. let me first take a step back and take a look at why the close link between banks and sovereigns has proved to be so problematic during this crisis. if many banks get into trouble at the same time, possibly due to the burst of a large asset bubble, financial stability as a whole is threatened. the state then often has no option but to step in if it wants to prevent a meltdown of the real economy. but such a rescue can place a huge burden on government finances – this is what happened in ireland, where the need to prop up the financial system pushed the deficit above 30 % of gdp in 2010. conversely, weak government positions can destabilise banks – directly through their exposure to sovereign bonds or indirectly through worsening macroeconomic conditions. that is also what we see right now. breaking the link between banks and sovereigns is vital to make the euro area more stable. a banking union can be a big step in that direction – but only if we harness the disciplinary forces of the market, not if we do away with them. core elements of a banking union therefore have to be, first, a comprehensive bail - in of bank creditors, and second, an adequate risk - weighting of sovereign bonds in banks ’ balance sheets. in order to minimise the risk that bank rescues pose to government finances, creditors have to be the first in line when it comes to bearing banks losses. implicit guarantees have to be removed as taxpayers ’ money can only be the last resort. by the same token, sovereign - bonds need to be adequately risk - weighted when it comes to the adequacy of capital buffers. riskier bonds have to become more expensive in terms of the amount of equity that they tie down, as is already the case with non - sovereign bonds. this serves two purposes : firstly, such surcharges should translate into lower demand and hence, larger spreads, which gives a disciplining signal to the respective sovereign. and, secondly, banks would become more resilient in cases of market turmoil. in addition, there should be caps on banks ’ maximum exposure to individual sovereign creditors, as is already the case with private creditors. bis central bankers ’ speeches such enhancements of the regulatory framework need to complement the envisaged european supervisory mechanism. in principle, this single european supervisor could help to prevent future crises by enforcing the same high standards irres