Challenges to turn this framework operational Let me now move on to challenges for this framework to become operational. We have been working since the end of 2012, on the preparation of the Single Supervisory Mechanism. Now that the Regulation has finally been approved by the European Council, the challenge is to turn this new framework operational before the ECB assumes its supervisory tasks. This poses, first, a logistical challenge as a new institution has to be created and numerous professionals have to be recruited. But most importantly, a complete set-up has to be developed to underpin the supervisory decision-making process, keeping it properly separated from the monetary policy structures at the ECB. And last but not least, before the SSM is fully operational by November next year, a comprehensive assessment of the European banking system will be performed by the ECB. 2  BIS central bankers’ speeches  From domestic to joint supervision The transfer of responsibilities from the National Authorities to the ECB should be a smooth process. The National Authorities have the expertise in the supervision of credit institutions. We will have to provide information, knowledge and staff, and we should not preclude the possibility of running certain processes in parallel for a while. Both the ECB and the National Authorities should seek to attain mutual confidence and understanding. The ECB supervisory powers will cover all tasks relating to the prudential supervision of all credit institutions. This entails supervising over 6,000 institutions.
The National Authorities will conduct the exercise at the national level, on the basis of data requirements and centrally developed methodology, and may ask for the support of third parties if they deem it necessary. To ensure consistency in execution across banks and countries, quality assurance processes will be in place at every stage. It is in the interest of all that this exercise be rigorous and transparent, so as to fully restore confidence in the European banking sector. 4  BIS central bankers’ speeches  Conclusions We have in front of us a year “fully loaded” – to use the jargon we all use in connection with of the Regulatory Basel Framework. The European Union is trying to make a big step forward and we will need the intelligence and best cooperation of all for this great design to be carried out. Thanks again to the Official Monetary and Financial Institutions Forum and to his Chairman, David Marsh, and to all the participants. I wish all of our visitors a very good stay in Madrid. BIS central bankers’ speeches  5