In terms of risk-weighted assets, the median Core Tier 1 ratio of the largest euro area banks currently stands at 12.7%, above their American counterparts. The majority of significant euro area banks already comply with the minimum capital requirements of the fully implemented Basel III framework. In terms of leverage – as measured by the ratio of equity over total assets – EU banks may at first sight appear to have lower ratios than their US peers, but as FDIC Vice Chairman Thomas Hoenig has showed, if the same accounting standards are applied then the median of the leverage ratios of large EU and US banks are quite similar. In terms of absolute nominal size, if we look at the 20 largest banks in the EU and the US, the EU banks now have a capital level approximately 100 billion dollars larger. 2  Gabriel Jiménez, Steven Ongena, José-Luis Peydró and Jesús Saurina (2012), “Macroprudential Policy, Countercyclical Bank Capital Buffers and Credit Supply: Evidence from the Spanish Dynamic Provisioning Experiments” Sveriges Riksbank working paper. 4  BIS central bankers’ speeches  Where euro area banks do not compare so favourably with their US peers, however, is in their low profitability and fragile investor confidence. Investors seem to be uncertain whether banks have proper asset valuations and are adequately provisioned. But this is precisely the issue the comprehensive assessment should address – it is an exercise in removing uncertainty by giving investors all the facts.
Some central banks are presently undergoing the process of shaping and consolidating their  BIS central bankers’ speeches  5  governance, an endeavor intended to transform them into modern monetary authorities. And, believe me, I know from experience how complicated such a process can be! In the early nineties, when I took over as Governor of the National Bank of Romania, a tremendous effort was needed to put into practice the transition from a monobank-type system to a two-tier system. It was by no means a simple task to reform an institution that had operated in the context of centralised planning of the entire economic activity and to separate commercial banking operations from central bank operations, which remained the responsibility of the NBR. The new NBR only counted less than 5 percent of the former central bank employees, most of them in the cash management and accounting units! Therefore, we had to build from scratch several departments that are key to the functioning of a modern central bank, such as monetary policy, economic research, banking supervision and regulation... Fortunately, the NBR was given a helping hand in improving its governance structure when it needed it the most. Just to give two examples, banking supervision was set up at the NBR with the extremely useful support of De Nederlandsche Bank and the forex market was put in place with the assistance from the central bank of Belgium. We are extremely grateful to both institutions for their generous support.