Cutting the bank-sovereign linkage of creditworthiness, which is the aim of the Banking Union, would be important for banks based in countries where government finances are weak. •  However, the net impact on the funding costs of banks will depend on how much of the implicit government guarantee remains.
That achievement would not have been possible had the Bank not put inflation at the forefront of its monetary policy objectives. Bank regulation and supervision must constantly evolve to meet new challenges arising from the structure and technology of the financial services industry. In the coming decades, the financial services industry will be transformed by information technology.