Against this background, the Banco de España has a tradition – one that I think it is comprehensively successful – of conferring high importance in its supervisory work to monitoring the rigour of financial information and of the models used to calculate riskweighted assets. Naturally, it is our wish that these elements, which crucially affect the supervisor’s capacity to properly measure banks’ solvency situation, should be part of the common model adopted by the SSM and applied uniformly to all banks. A third significant challenge concerns achieving a fruitful framework of interaction between the SSM and the Single Resolution Mechanism. The regulations have set in place a complex structure in Europe, which includes the creation of a resolution agency (the Single Resolution Board) separated institutionally from the supervisor. This agency has been granted wideranging powers both in respect of the definition of resolvability requirements – which include the determination of a minimum volume of instruments capable of absorbing losses – and of  4  BIS central bankers’ speeches  the activation of resolution procedures for non-viable banks, as well as the selection of the most suitable tools to implement them. Resolution actions have direct consequences for financial stability, which is a public good that the SSM seeks to protect, and they turn on the more vulnerable banks, which are precisely those that require greater attention from the prudential supervisor.
Naturally, to achieve this homogeneity, bank crisis-prevention and management mechanisms are needed along with risk-mutualisation arrangements that minimise the link between national economic and fiscal conditions and the ability to preserve the value of bank liabilities in each jurisdiction. These requirements include a single supervisory mechanism as a prevention tool, a single resolution mechanism that pursues the homogenous treatment of banks with viability problems and has a common fund to make this economically feasible, and an integrated deposit guarantee scheme that ensures identical coverage throughout the monetary area for eligible deposit-holders. We can already claim that the project to set up a Banking Union that includes the abovementioned ingredients is close to becoming a tangible reality. Just a few weeks back we celebrated the first anniversary of the start-up of the first of the three pillars of the Banking Union project, the Single Supervisory Mechanism (SSM); the Single Resolution Mechanism, the second pillar of the Banking Union, is now under way and will be fully operational from 1 January 2016. Admittedly, certain relevant aspects have still to be set in train. First, the single resolution fund must be strengthened to ensure that it is strong enough to withstand future banking crises, without destabilising the public finances of the countries concerned. Further, we must step up efforts to move forward on the third pillar of the Banking Union, the establishment of a common deposit guarantee scheme, based on the proposal released by the European Commission last week.