Since there has been some confusion in the past, I would like to reiterate that this would indeed require a change of the ESM Treaty but not of the EU Treaty. Second, we would need an insurance mechanism against tail events that may still arise and endanger euro area financial stability. Here we already have the ESM to act as lender of last resort to sovereigns. To sum up: a functioning banking union reduces the need for the stabilisation function of a fiscal union, but not to zero. Conclusion I have tried to give you the ECB’s view on the various aspects of the banking union. Our preparations to take over the task of the SSM are well under way. We are adamantly  4  A recent study demonstrates that automatic stabilisers absorb 38% of a proportional income shock in the EU, compared with 32% in the US. In the case of an unemployment shock 47% of the shock is absorbed in the EU, compared with 34% in the US. This cushioning of disposable income leads to a demand stabilisation of up to 30% in the EU and up to 20% in the US. See: M. Dolls, C. Fuest and A. Peichl (2012), “Automatic stabilizers and economic crisis: US vs. Europe; Journal of Public Economics”, Elsevier, vol. 96(3), pp 279–294. 6  BIS central bankers’ speeches  convinced that banking union will only function if the SSM is complemented by a single resolution mechanism and that it is put in place without undue delay.
We must now pursue the efforts already initiated and do our utmost to ensure that these improvements feed through to the real economy so that economic growth can return and unemployment can reverse its rising trend. Thank you. 4  BIS central bankers’ speeches