However, it is also important to continue to ensure that banks are not primarily judged according to their origin and geographical presence – here the horizontal functions of the SSM have an important role to ensure risk-based approaches to micro-supervision. Addressing the home-host issue is another important issue of concern. Aside from preventative measures there are also the crisis management tools.
Here resolution is primary and that is why it is a critical pillar to ensure the smooth functioning of the banking sector. Legacy issues appear to dominate here – too big to fail, moral hazard, a failure to address systemic crises where financial stability is compromised at the national level. Let me suggest three priority areas.