Well-crafted capital standards provide a buffer against loss from any activities of a bank, while good liquidity standards help provide assurance that a firm will have breathing space during a period of financial stress, whether idiosyncratic or systemic. But we cannot rely solely on these standards, important as they are, to provide a stable financial system.
This was not always conducive to financial stability in other Member States or in the euro area as a whole. Governments and market participants trust the ECB in its role as an established, supranational institution to supervise the banks impartially and in the best interests of Europe. And many in the ECB were also somewhat sceptical to start with.