You are all familiar with the challenges we face. But alone, none of you, none of us, would be able to find the perfect solution for regulating and supervising the financial system. No single person, no single institution and no single country has the perfect solution. We can and must learn from each other. And we can and must work together. 6/7  BIS central bankers' speeches  The banking union now allows us to do so – effectively and efficiently. Thank you for your attention. 1 Article 1 of the SSM Regulation (Council Regulation (EU) No 1024/2013). 7/7  BIS central bankers' speeches
From that vantage point, I will make four remarks: 1. Revenues for the twelve biggest European banks have grown, in aggregate, by 8.6% in 2010 (as compared, to 2.5% for the main US banks). As a result, European banks’ Core Tier 1 ratios stood at between 8.5% and 15.3% at the end of 2010 (corresponding numbers for US banks are between 8.4% and 13.3%). Our “universal banking model”, based on a diversity of activities and sources of income is proving its resilience. 2. Obviously there is a circular causality between government debt and the banking sector. Spreads on public debt naturally act as floors for the funding costs of banks. And, conversely, doubts about banks solvency create expectations of public support and deterioration in public finances. This gives rise to multiple equilibria where sudden shifts in confidence can be self fulfilling and create difficulties which, previously, did not exist. This process has been at work in a number of cases in the Euro area during the last year. 3. The main purpose of the stress tests is to break that circularity. Our first european tests encompassed 81 banks vs only 19 for the US. The basic exercise was sound and taken as such by analysts when it was published. Somehow clumsily, however, a few banks were added at the last moment, with only limited investigation, and these are precisely the banks which proved problematic afterwards, which undermined the credibility of the whole exercise. That mistake won’t be repeated. 4.