Remember the US subprime real estate market and its effects on globally active banks. Thus, it will be essential to combine the knowledge of global, national and regional economic conditions, infrastructure and legal systems with knowledge about banks’ business and risk profiles, governance structures and control systems.
In short, setting up a new European supervisor within a year or so is extremely ambitious, but doable. However, with regard to the governance structure, there is a problem that cannot be fully resolved under the current framework – the strict separation of monetary policy from banking supervision within the ECB.