The resolution of such a bank would involve ten national authorities, ten resolution funds and ten deposit guarantee schemes; needless to say, there would be many challenges involved in ensuring efficient coordination. The envisaged EU authority would spare us a great deal of these efforts. And I see no reason why such a vision should be considered unrealistic. Events are moving faster now than before. Crises make us reconsider things that we would have seen as beyond the feasibility horizon. For example, of the challenges that I have mentioned here today, the financing part is probably the biggest obstacle for such a quantum leap. However, in another dimension and for the euro area we already have the EFSF in place. Such a facility would have been simply unthinkable a couple of years ago. Similarly, I consider the setting-up of a permanent EU or euro area resolution fund to be one imaginable way to proceed. Of course, I am fully aware of the technical, legal and, most importantly, political complexities of such a move. Nonetheless, Europe could advance step by step. The euro area may be the most realistic starting point, since a stronger concept of the euro area as a legitimate entity has already been emerging. Likewise, fiscal coordination has been fundamentally strengthened during the crisis, paving the way for a specific economic governance concept for the euro area.
The establishment of temporary credit institutions or bridge banks is emerging as a key resolution tool, but the new resolution frameworks need to address a number of related technical issues, such as the question of who provides the necessary capital and liquidity to the bridge institution, how the bridge bank can use the infrastructure of the failed bank, and how and when it is ultimately dissolved, since bridge banks are temporary entities needing a good exit strategy. Finally, the design of bank levies, which could usefully be collected into resolution funds, is also a delicate area. Mechanisms are under examination both to recoup the losses of the crisis and to create provisions against future events. I believe that ex ante funding is a crucial element, since it may reduce moral hazard and improves the authorities’ ability to react to crises earlier, thus strengthening the credibility of such actions. Levies are valuable revenueraising mechanisms with which to finance crisis measures. Uncertainty remains as to how they would affect the particular problem of moral hazard in the financial sector, and both the rate and the base of levies need to be determined with care, especially if we want to include the aspect of systemic risk as well. However, maintaining a level playing field and coordination between Member States remains in my view paramount in order to avoid a distortion of fund contributions and resolution tools. Challenges ahead – more integration I am confident that the emerging EU regime will appropriately address all these challenges.