And our efforts need to go beyond preventing risks from building up in the future. We also have to cleanse balance sheets of existing stocks of NPLs. So far, the European Central Bank and the European Commission have both only presented measures 3/4  BIS central bankers' speeches  aimed at improving risk provisioning for future NPL flows.
High and heterogeneous levels of NPLs are one key impediment to taking further steps towards a common deposit insurance scheme. Another stumbling block is related to sovereign exposures on banks’ balance sheets. Due to regulatory privileges, sovereign exposures are not – or only thinly – backed by regulatory capital.