Large banks have reduced outstanding amounts of nonperforming loans and have increased provisioning. They have also reduced the risk pertaining  BIS Review 55/2003  1  to stock prices by selling their shareholdings to the market as well as to the Bank of Japan under our stock purchasing scheme. Almost all banks have reduced their shareholdings to levels below their Tier 1 capital.
The setting up of a banking union with the Single Supervisory Mechanism (SSM) and the single resolution mechanism (SRM) as core elements is therefore key and will enhance the quality of supervision and the credibility of the system and remove the misalignment between the institutional frameworks for monetary policy and financial stability.