Four initiatives are needed to reduce the threats that the balance sheets of too many euro area banks still pose: First, we need improvements to the Single Resolution Mechanism and an increase in bailinable capital. Second, we need institutional improvements concerning national insolvency regimes. Third, we need a reduction in non-performing loans on bank balance sheets.
9  See B Hofmann: Do monetary indicators still predict euro area inflation?, Bundesbank discussion paper, 2006, forthcoming. BIS Review 39/2006  3