Peter Praet: It is urgent to agree on an ambitious timetable for completing the Banking Union Contribution of Mr Peter Praet, Member of the Executive Board of the European Central Bank, for the magazine of the Eurofi conference in Malta (5-7 April 2017), 4 April 2017. * * * In less than half a decade, the EU moved from decentralized banking supervision and resolution to the Single Supervisory Mechanism and the Single Resolution Mechanism, based on the Single Rulebook. This is part of an overarching effort to create a sound institutional framework for financial integration in Europe. There still are a number of legal, institutional and political problems to overcome before a European bank can operate in the Banking Union as it operates in its domestic market. Several dimensions need to be taken into account in institutional design. First, private risksharing. The financial system is a private risk sharing device, but we have learned the lessons from the financial crisis in terms of budgetary costs, when excessive risk-taking by the private sector was eventually borne by the public sector. Not to revert to the old world of implicit government guarantees for risky behaviour of financial institutions entails making banks equally liable across countries for the amount of risk they want to take into their respective balance sheet. The general principle of the new European rules such as the Bank Recovery and Resolution Directive is to absorb bank losses by bailing-in shareholders and uninsured creditors.
In this context, despite high volatility of consumer prices and exchange rates in trading partners, including the sharp decline in oil prices in the second half of 2008 (one of the main fundamentals in Algeria’s economy), the REER has remained near its equilibrium level and the external financial position remains comfortable. 4  BIS Review 168/2009