Not only did we hire 1.000 new staff members at the ECB, but we also integrated 5.000 staff members from 26 national supervisory authorities, who were formerly responsible for supervision in their home country, into the SSM. Since November 2014, the SSM is responsible for directly supervising 1200 individual banks, which until that point in time had been supervised according to 19 national interpretations of European law and according to specific national regulations, following a national supervisory tradition with varying degrees of quantitative and qualitative elements, with a historically grown reporting universe. It was a busy first year. And it was a successful first year as we made progress on many fronts. We achieved a lot regarding our main objective: we improved the resilience of 122 significant banking groups, of the 19 national banking systems, and of the European banking system as whole. The comprehensive assessment was the most publicly visible success, but many smaller and less visible steps followed and will still follow on our way to a safer and more sound banking system in the Euro Area. As the SSM changed the way supervision addresses problems and communicates what it expects to be done by banks, it also changed the timing and the way banks, their management and their owners acknowledge shortcomings and find solutions.
In this way confidence in the financial institutions can be restored, and the vicious cycle of liquidity bottlenecks, forced fire sales and bank runs can be ultimately avoided. By providing emergency liquidity assistance, central banks aim primarily to stabilise the precarious liquidity situation faced by solvent institutions. Above and beyond this, the increasing importance of systemic risk has made the emergency liquidity provision to entire markets ever more imperative. Markets can also be faced with liquidity runs. This was only too evident from the high risk premia observed in the interbank market during the recent crisis. It is conceivable that central banks will take on the role of market maker of last resort in such situations in order to secure key market functions. Indeed, in certain situations it is essential. 9 In an acute crisis, the costs and probability of a system collapse can be reduced in this way. However, the assumption of a lender of last resort or market maker of last resort function is not without problems. First, it does not guarantee long-term stabilisation in every case. Second, these crisis measures are no substitute for tackling the root causes or for lack of robustness on the part of financial market participants. In particular, the presence of a market maker of last resort is associated with a variety of incentive problems. 10 It can, for instance, encourage market participants to enter into excessive risk exposure in the expectation that the central bank will step into the breach if necessary.