And trust tends to be lower in some jurisdictions than others, creating fragmentation, as shown by certain banks’ lack of access to market funding. How will Banking Union help restore confidence across countries? In general, we hope that the SSM will bring about a regime change in supervision and increase trust by creating more stable banks. But this is more a forward-looking consideration.
The immediate challenge is to address the concerns about banks’ balance sheets that are already there. And this is why the ECB is putting a great deal of importance on the balance sheet assessment we are required to conduct for those banks that we will directly supervise. The methodology for this assessment is currently being designed and we want it to be rigorous.