I don’t need to explain the practical relevance and occasional topicality of this connection to listeners from member states with a federal structure such as Austria and Germany. It would be a false signal, which would threaten to discredit the proposed European risk-sharing mechanism from the outset, to now mutualise risks that arose under national responsibility.
That’s why, ahead of any fiscal backstop for the Single Resolution Fund or a common deposit protection scheme, it’s important that we first make significant progress in getting rid of legacy risks. Legacy risks include the outstanding stocks of non-performing loans on banks’ balance sheets, especially those not covered by loan loss provisions.