The European Systemic Risk Board identifies risks and can make recommendations to individual countries, but if the ECB thinks that this doesn’t go far enough, it can take charge and impose additional requirements at the European level, something that has so far never been done. The area where no tools exist – and this is a matter of concern – is nonbank activity.
Now that the problems have been addressed in flawed financial institutions among securities companies, insurance companies and financial holding companies, the implicit repayment guarantees are in turn unwound and the exit mechanism is gradually built up. We are now steadily promoting the deposit insurance system, expecting the orderly building of a financial risk resolution framework based on deposit insurance.