This means that the members of the banking union should establish and implement a harmonized framework for banking regulation and supervision. Second, there should be a single supra-national supervisory authority in charge across the union (the main supervisory tasks will be transferred from the national to the European level). Third, there should be a single bank resolution mechanism to address potential banking crises. Fourth and finally, there should be a single deposit guarantee scheme in order to harmonise and centralise deposit insurance. IV.3. Assessing the project  Obviously, each pillar has its own pros and cons. Let me mention the most important ones. As concerns the single rulebook, the financial crisis highlighted the danger of divergent national rules. The current context justifies the adoption of a common legal framework for banking regulation. The European Banking Authority would play the central role in elaborating the rulebook. The result will be (i) less regulatory arbitrage; (ii) a reinforcement of the competitive neutrality principle: same business, same risk, same rules; and (iii) a higher level of transparency, contributing to a robust and uniform regulatory framework in the Single Market. On the other hand, there are some risks: (i) implementing the same rulebook across over 8,000 banks in 17 or more countries may not prove flexible enough; (ii) the tougher regulations currently in place at national level might be undermined in those non-euro area Member States which decide not to join the banking union. Local subsidiaries may choose to bypass the more prohibitive banking legislation by turning into branches.
The banks in Bulgaria have an important year ahead, which we expect to be overall successful for the sector. Banks’ operations continue to take place in an environment of rather optimistic attitudes of enterprises and households amidst a relatively high growth of the Bulgarian economy. At the same time, the external environment holds risks and insecurity that, due to the openness and international integration of our economy, could potentially affect the economic 1/2  BIS central bankers' speeches  situation in Bulgaria. Some adverse scenarios could exacerbate aspects of the risk profile of the banking sector. Therefore, it is essential that in their behaviour banks continue to take into account the main risks, including profitability risks and asset quality risks. 2/2  BIS central bankers' speeches