 We're back and thank you very much gentlemen for the great conversation. I'm sure it seemed like the whole room was on tenterhooks to listen to you. So, and that is very much leads us to our first panel discussion here. They are all set up and the panel is called Taking Stock, the Single Supervisor 10 Years On. Let me introduce our moderator, Nicolas Veron, who was a senior fellow at Bruegel and the Peterson Institute for International Economics. Nicolas will introduce the panel members. So, please go ahead, Nicolas. Thanks, Connie. And wow, that's a tough act to follow. So, Andrea, here we're 10 years on. I remember we were on the same panel five years on, five years ago in early December 2018. That was a farewell event for Daniel Nui, who was also a tough act to follow. And I was looking at my notes of that event in 2018. I had came out or into the panel, I don't remember, with four challenges for European banking supervision. This was my reading. The Bank Sovereign Vicious Circle, still there. We heard it. The risk of political rejection of European banking supervision, because there was the risk of the good-cup-bad-cup dynamic in which the NCA, the National Competent Authorities, would be the good-cups and your shop would be the bad-cups. I think the picture on this five years on, again, my personal judgment here, is actually quite positive. This scenario has not really materialized. Maybe it will materialize in the future, but it has not so far. Third one is the internal workings and governance of the supervisory board. Here I have to say, I don't know because it's not public information, but seen from the outside, no dysfunction has been really observable. And the first one was less significant institutions and the risk of regulatory arbitrage between the tougher standards for larger banks and the laxer standards potentially based on anecdotal evidence for smaller banks. I think here, my impression is that the practice of the last five years under your leadership have brought some improvement. But it's not for me to provide assessments here. It's for our panelists. I will start by asking them short questions. They will probably not answer directly my questions and they will say what they want to say, which is appropriate, but I call them on the time discipline. We want this to be a conversation, so maybe starting with you, Elizabeth. For you, President Lagarde has told us in her judgment, the European supervision has exceeded expectations. What has been the most important achievements of the last five years? It's awfully hard to brag about oneself, so this is not at all about me. I say that at the start. It's really about Andre and his leadership and all of the staff at the ECB and all of the board. And I think there are significant achievements and there are three. The first is resilience. We have a very resilient banking system. It entered this period of time and it withstood this period of time, which has been a triple threat, the pandemic, the war, and also rising interest rates. And that is no small feat. The second is maybe an intangible that's worth its weight in gold, and that is trust. And I would say that word in connection with the internal workings of the supervisory board and also structural changes and a much more collaborative spirit that we saw develop across the teams and the staff. And that trust is something really immeasurable. You know, when you think about the start of the banking union, there were a myriad of supervisory philosophies and practices. And the way forward, which Danielle Nui did so ably, was to set up rules and consistency and processes. And that enabled then for trust to be developed, where the board doesn't have to revert back all the time just to the rules, but to take judgment calls and to allow the staff to take judgment calls. And then that's the third element and I would say it's agility. I think Andrea said rather famously that the SSM is a tanker camouflaged as a race car. Did I say it the wrong way? Oh, God. A race car. It's a tanker camouflaged as a race car. It's camouflaged as a tanker camouflaged as a race car. You get the point. But I think this is also something that you don't see and you don't measure it, but having the ability to have agile risk-based supervision is what's absolutely needed in this incredibly challenging time that we're in with the triple threat and with the changes in the economy. And that's the day-to-day supervisory process. I think those are three very tangible achievements. Dominique, you've been in the supervisory board. You are now a supervisor yourself because the SRB has a backup supervisory function. So you have multiple hats to wear on this panel. How do you look at it? And also frankly, how has the SRB's role, how has the SRB found its role in the broader supervisory framework? Thank you. Thank you, Nicole, for this question. Well, I was a little bit surprised that during the first interventions, never ever the term resolution or second pillar of the banking union were mentioned. So thank you for inviting me to, let's say, put flesh on this notion about this second pillar. And indeed, indeed, what matters when you spoke about trust, when you spoke about resilience? Indeed, there is a continuity between these two pillars of the banking union. I think 10 years ago there was nothing in terms of resolution. But don't forget the value added of building this additional element for, let's say, preventing supervision and managing the crisis when they occur. This participates in building this additional level of trust and this additional level of resilience. I'm absolutely persuaded of that. So that means that, yes, indeed, there is a sort of continuum between supervision and resolution because in our jargon we are speaking about resolvability, meaning that if we want to step in properly based on the outcome of the work conducted by the supervisors, we need to be ready. And when I say we, it means the supervisors, the resurrection authorities, the bankers themselves, and obviously all the others who are involved in a crisis management. Because managing a crisis means a lot, a lot of actors and a lot, a lot of interconnection. And the best thing to do is to prepare this in good times, in peaceful times. So yes, we have some sort of supervisory role when we are working about resolvability, we are working in reality hands in hands with our colleagues here at the ECB, also with the national authorities, obviously. And we are building more and more this resolvability step by step. So that means that we need to work during going-concern period to avoid to have to act during gone-concern situations. But if we have to act, we will do, obviously. Let me give you three very, very tiny examples of this daily cooperation between supervision and resolution. Andrea, you have a big role to play here. We have decided this year to visit altogether the Banking Union member states. So we are organizing common visits and I'm very pleased that, Claudia, you've accepted to continue this good practice, showing what the Banking Union means in reality. Second example, we've developed, and I know that bankers are always complaining about that, we are developing common templates, common approaches to avoid overlaps or to avoid to give a feeling that we are doing completely separated things. We are building something which is in a continuum. And the third example, they're well-commented by the way in due time. It was this famous, a common joint statement we took in March about the treatment of 81s, and thank you, José Manuel, from EBA to be also part of this joint statement. Three examples from their different angles which tell us that indeed we are participating into this supervisory role at our place and that we are participating in building more trust and resilience in the banking system. We are shifting towards more resolvability. We will increase this dimension, definitely. Thank you. Anna, we heard Jacques de La Rose here give us an incredibly candid and I think accurate exposition of the political economy of banking union at this point and the fact that large banks are not eager for European deposit insurance and not eager on banking union more generally. Is that true of all large banks? Well, thank you for inviting me. It's a pleasure to be the only banker on this panel. I will do my best to represent my colleagues. If you allow me to say first that bankers don't complain, bankers provide constructive challenge. Absolutely. Sorry. I'll remember that. We are all in this together. We have some experience at Santander. We actually were the first bank to test the single resolution and I believe it worked pretty well. If you ask me what is the one thing, well, actually several things. One is that you need anticipation and I think the supervisory system is essential in that to know where the weaker links could be. But very important, you need trust. As you very well said, you need trust among supervisors. We worked with our supervisor at the time. Both Bank of Spain had a very important role and already the SSM, but many other actors. It was even the Americans, by the way, because it was a bank in the U.S. It's a complex thing and I'm very happy that we continue to work on that. But to Jacques de la Rocier, Monsieur, a great admiration for you, but banks would love to do more plan European consolidation. If you allow me, let me just give you how we see it from the boardroom, because we as banks, and Madame Lagarde said it, the way the market is valuing banks in Europe still, the cost of equity of Santander today and we're one of the largest banks with a 15% ROTE is 18%. And so, when we look at pan-European consolidation in the board, we are allocating capital. That is the basic decision we're making. We're putting capital at work in certain markets or in certain transactions. So, you know, the main levels of course, complexity, teams and all these other issues, but I'd say three main points we look at. The first is the macro. Are we going to grow in an area that grows, what are the prospects, what are the returns associated with that? And there was a very interesting Brogol study this morning, actually, where productivity per capita in Europe has done better than the US, but the fact is that just comparing two big markets, the US economy since the financial crisis has grown almost double Europe. This is a big factor in terms of where we put our capital and our priorities in our management time. Again, I think Europe has huge opportunities, but the fact is that the prospects for growth remain not as good as in other markets. The second one is the operating context, and Andrea mentioned that very well. So, the operating context in Europe, and we have launched a digital bank in Germany, it's really difficult because the fiscal treatment has so many different ring fence. It's liquidity, yes, we don't have a euro. We have a euro in Germany, a euro in Spain, a euro in Italy. That is absolutely essential, but there's many other drawbacks that make this cross-border very, very complex. And so, you know, I could go on with the list. I don't want to leave out an essential one, which we cannot have integration in banks if we don't have a single banking union, European deposit insurance, you know, sometimes that pays 240, 230 million per year. We already contribute to a pan-European and a national system. We're not against that. That's one of many other things we have to put in place so that this happens. Let me end by two that you might expect, I would say, in this forum, which is regulatory and supervisory items, but they're not the biggest ones. I think the other ones are actually more important. In terms of regulation, and this is something which makes sense, you know, the more likely candidates or cross-border are going to be the larger banks. If you acquire a bank that is, say, sometimes that has 1 trillion in loans, 200 billion immediately would put us into the next GC fee charge. So anytime, let's assume the macro works, the operating context, we have capital markets, but current regulation would make it prohibitively expensive because we would actually become 1% more capital for the whole balance sheet. On the supervisory front, we did Banco Popular. We got great support from supervisors both in Frankfurt and in Spain, but there are items that have put us at a disadvantage because there is a process, for example, for approving models. When you take over a failing bank, let me say usually it's not a greatly managed bank. And so the models in that bank are probably not great. So it takes time until you can go through the process. I know these things, we've shared and will be fixed, but I'm just saying that when you actually are there, you are going to apply the mortgage models of a failed bank, potentially, or at least, there's always issues that arise that are new. And so I'm very happy that there's this collaboration because these are things that would help. But let me say this is not a big point. So Andrea, I mean, this is not the showstopper because you've been very on your team. We've had many discussions. This is known. So again, this is mostly about capital allocation and where do you put, you know, the world is competing for savings. We need savings. We need equity. Where do you put that? If you go through the list and you're sitting in a board, it's going to be difficult that this happens anytime soon. But we would love that we can together solve all of this, of course. I'll have follow-up questions. But let's move to Shan. You were present at the creation of European Banking Supervision. You also published a report this year, DG Fissma report on supervision. So how do you look at it? How do I see the baby? It's a teenager now. That's the thing. Well, it once was a baby. And for me, it's an ambiguous success story. I mean, I think. And although President Lagarde said there were high expectations, success was not guaranteed at the outset. We had high expectations, but we were not entirely sure it would work. And I remember talking to Andrea actually and saying that asking him what was the difference between single supervisor and single supervision. And this was before you were ever anywhere around the SSM and you told me probably about 10 years. So here we are. We had a single supervisor and I think that was done by a legal act. Very well-crafted. Well-crafted, if I may say. And single, thank you. And single supervision, however, is 10 years of hard grind. 10 years, I think, started by Danielle when this was a start-up operation. And then I think five more years under Andrea when I think the institution has matured into what is, I think, one of the most globally respected supervisors. I think that's obviously clear. Now, we are, we have done our report. We do a report every three years or so. I will not go into the details of that report just to say that it came out pretty well for the SSM. I think, and this is not our report. It's not the commission sort of, this is what we do checking with the other stakeholders, all the stakeholders of the SSM. And what we found was that the SSM is very well regarded by all of its stakeholders. So by the banking sector. By NCA's within the Euro area. So within the banking union and NCA's outside. So this is, so it's not us saying this. This is the main stakeholders. And we, of course, in the commission, we're very proud of whatever part we played in bringing this about. And I think with the SSM and the SRB, Dominique, I will never forget you, you know that. We have, I think, you know, put in place a lot of the institutional architecture that we need for the banking union. But as Andrea pointed out earlier, the only thing missing is the banking union and the integrated banking sector, which we lost actually during the crisis. And I think for that, I mean, that will require building of more trust, I think, in the ability of the infrastructure to deliver efficient and fair outcomes. And part of that trust will be delivered by putting in place the deposit insurance scheme. I'm a commission official. You'd be very disappointed if I didn't mention that, but I happen to believe it's still true. But then also, of course, you have to build trust through not just through the institutions themselves, but all of the actors, including the commission, the member states in this banking integration process. I can't remember ever disagreeing with Jacques Rozier in my life, and I'm not going to disagree with him now in terms of his factual presentation of the political economy of European financial integration in general and banking in particular. But I'm a commission official and I'm paid to be optimistic, and I'm going to stay optimistic. Because I think one of the unseen things of the crisis, apart from the collapse of trust, was that the focus of the debate now is almost uniquely on the cost of what goes wrong in cross-border finance, and almost none on the benefits of cross-border finance, which is what happens most of the time. And for those of us old enough to have been around before the great financial crisis, you know, we used to talk about scope, scale, economies, diversity, private risk sharing, competition, all those things. I mean, I come from a country which can demonstrate both the upside of cross-border finance and the downside of cross-border finance if you don't manage it properly. But I can tell you, Ireland would not have gone from being the poorest country in the Union to being on some metrics the richest country in Europe even had to rely on its own savings rate and its own financial system. And I often think that some of the member states who are most skeptical about banking integration and we know the non-linearities in banking integration, these are the countries who have most to benefit by having it. So, Jacques, I remain optimistic, even though you probably think I'm crazy, but there you are. Thorsten, in a way, you provide the view from the ivory tower here. You're one of the most prolific and respected academics in this field. What is your perspective on what has been achieved in the last 10 years, including the last five years? Thank you. Well, thank you first of all for inviting me. Well, first of all, if you look back 15 years, so 2008-9, when the first of us academics called for what is now referred to the banking Union, we were kind of laughed out of the room, effectively. We were told it's legally not feasible and it's politically impossible. We have a single supervisory mechanism 15 years later and for 10 years in place. So, number two, I remember fall 2014. I was back in base in London back then and I was invited to a presentation by ECB officials on the comprehensive assessment, which showed there was a result and there was a question, for me there was a question. The result was this enormous variation in asset quality, asset quality adjustment, but also effects of the stress tests. This is kind of the 40% that Madame Lagarde referred to earlier, which I think, as you mentioned, has been closed. The question for all of us back then was, what next? So, we had these stress tests and the single supervisory mechanism was about to start. What would be the effect? And I would say yes, it has been enormously successful and if I kind of just look at it from the literature, it's a bit hard to summarize the literature in two minutes, but I'll try it anyway. I think the most important change has been that banks react to the existence of a single supervisor. They also react, by the way, to the stress test. I mean, even the comprehensive assessment, most of the banks that were shown to have a capital shortfall actually raised the capital even before the results were published, which shows us something. So, yes, banks that came under the supervision of the single supervisor raised more capital, lowered their risks. They also did less lending. That's also in there. Now, this is the positive side. This is the stability side. Now, I have to just pour a little bit of water into the wine. If you look at the real sector, yes, there has been also, of course, less funding for some firms. On the one hand, for riskier firms, but also in some of the research that I've been doing, we found actually also there's less funding available for intangible assets. Why? Because tighter lending standards more asking for collateral. Now, is that something negative? I would say no. Because maybe we need these other financial intermediaries, the other financial markets, to fund exactly this kind of activities, more the intangible side. So, maybe that's also in the sense of this whole debate on bank bias or being overbanked is actually a positive effect. And, of course, that brings me just to throw in this buzzword to the Capital Market Union, which I think we should also put on the table. So, overall, yes, my view would be very positive. Now, you did not invite the academic to just say positive things, right? I have to do some skeptical things. So, of course, I agree with everybody here on the panel. I think it was everybody that the banking union, as we understand it, is not sufficient. So, I will not repeat it. I will just look it from the other side. So, in normal times, we have a very strong supervisor, which has achieved a lot. And I think the fact that we got through the term oil offspring 2023 actually is a big merit for Andrea and his team, I would argue, and for the work that has been done by the single supervisor supervisor and the single supervision over the past 10 years. But the question that I ask myself is, what if, if we are in a crisis back in 2008, like in a crisis in 2011, 12, 13, would the SSM be enough? Could we just rely on the SSM? Of course, we have the SRB, but with limited tools and incentives, tools and policy. Would it be enough? Or do we need another ad hoc policy package? And of course, again, this is something that also Nicola and I, we wrote about. I mean, if you look at the initial three objectives, breaking the sovereign bank vicious cycle, terminating, finishing off bailout forever, and creating a single market in banking, I think we've made limited progress, unfortunately, in this. So yes, SSM has created a level playing field, but it's not sufficient for really creating a single supervisor mechanism for which we would need the other elements. But, and here I also agree with Ana Botin, even that, even if we are waking up one day and we have the banking union complete, would that be sufficient for a single market in banking? No. And you mentioned, of course, taxation. You can think about other regulatory policy. But let me bring up, and this is my final remark, one more thing, the politics. I think as long as we don't get politics, especially local politics, talking about savings banks, local politics, national politics, out of banking, I think we will not be able to get to single market in banking. Now I'm not being paid to be an optimist, unlike Sean, but actually I'm also a little bit optimistic. Maybe it's, I'm not sure why. We've managed in Europe to get politics out of many, national politics, out of many sectors. So maybe it's now, there is still a chance we can ultimately also get it out of the, out of the banking sector. Thank you. I think getting politics out of saving banks may be a little bit too high a bar, but maybe we can achieve a lot even without that. The speakers have been commendably disciplined in their time and location. And as a moderator, this is my only role really. So I, what I will ask them is to answer maybe very brief follow-up questions from me, and then we open it to the floor. We also open it to the online audience. There is a tool to ask questions online. I get them on this ECB device. And so I encourage everybody to think of questions. And after the fast round, hopefully, that I'm starting now in the same order. Elizabeth, all the talk right now is about a less capital-driven supervisory review and evaluation process. That it was a bit like, you know, mechanistic or I don't know what the right word is, you will tell us. There was a high-level report, very interesting, delivered to the European Central Bank earlier this year. I guess, is there a risk of the pendulum going too far back in the wrong direction? So Daniel Nui was all about harmonizing the process and making sure that the ECB was not only tough but also fair. Is there a risk that the move away from capital-centric threat, sorry for talking so jargon, would lead us to a situation where actually we could get again into situations of banks in different countries with different politics with different environments being treated differently by European banking supervision? Let me take just a little bit of a step back and I won't talk too long, I promise. Back in more than a year ago, a year and a half ago, Andrea Ria commissioned a set of wise persons, an expert group comprised of five persons of gravitas who were no longer serving in supervisory roles but who had extremely significant experience and without a crisis on our hands in a moment when the market wasn't broken in some way. Ask the question, how do we continue to evolve our supervision? How do we have the most impactful supervision? And how do we be the most effective supervisor? What are the things that we could be looking at and gave them an open door into our processes and our policies? Did they have access to all the documentation, bank-specific information? No, we protected the confidential information and anonymized things that would have been releasing any confidential information. But they had access to all of the processes and they had the ability to review anonymized information and understand our supervision and the impact of it. Why is this important? The week that I think none of us got any sleep back in March when we had the events in the U.S. and the events in Switzerland occur and everyone around the world was asking the question about effective supervision, we delivered a report about the effectiveness of supervision and it found that our supervision is effective but it also made very important recommendations about how we can continue to evolve and you're picking on one of the key recommendations and the language in the report and it's appropriate which was the finding that we have so far been capital-centric and the building of the SSM, of course this is everything related to our history. The SSM was born into a moment when confidence in the banking system was completely shaken, the sovereign doom loop needed to be broken and the recapitalization of the banks needed to occur. So the supervisory efforts were really geared at the things that led us to being able to withstand the triple threat that we found ourselves in earlier this year. That doesn't mean that we are not going to use our capital tools. In supervision we always say capital is king. It means that we have a whole set of tools that we haven't exercised our muscles with and to date and that now we will be in addition to paying very close attention to capital and using the very powerful tools we have to do capital add-ons where we see too much risk developing but we will now also exercise those tools in the context of remediation. I think one of the key learnings from the dislocation that occurred in the market earlier is supervisors need to act timely and it isn't necessarily with slapping on a capital charge that you get the change that's needed. You need to hold banks to account to remediate processes that are weak in their risk management that lead to a weakened risk profile so that they can be strengthened. And the way to do that is by putting in place escalation measures, findings that follow through on non-remediating problems and ultimately taking sanctions with penalties where institutions haven't followed through on the things that need to be strengthened from a risk management point of view. So I would say that you will see us going forward using the rest of that toolkit, which Sean said this before, is a sign of maturity of the supervisory process no longer in its infancy. I'd argue it's beyond its teenage years and I'd argue that it's an appropriate time for us to be implementing remediation measures and holding banks to account. Dominique, I cannot resist since we're both here asking you about this articulation between the supervisory function of the SRB and the supervisory function of the SSM, perhaps at its most sensitive point, which is a failure or likely to fail the point of non-viability determination. I remember your predecessor, Elka Koenig, talking about that, but I was intrigued by the case of Sperbank where if I'm not mistaken, both organizations made a failing or likely to fail determination. Both of them communicated about it, which was different from the previous cases, where only the ECB had made this determination and the SRB just took it from there in terms of its public interest assessment. Can you tell us more about whether that's a signal of a change in philosophy or how we should read that? Well, Nicolas, sorry. I know that you're an academic and not a lawyer, but in reality, I don't see a lot of difference between the different cases. In both cases we had to assess the failing or likely to fail situation on both sides. This is exactly what is written in the regulation. That means that indeed the first assessment is made by the supervisor. At the moment, the supervisor says, well, I've taken all the measures I could take, capital-centric, risk management-centric, whatever. At that moment, facts are coming so quickly and in the wrong direction that we cannot act anymore. At that moment, based on some criteria, the bank is considered failing. But one of the yardstick put in the regulation is to say, OK, but careful because either the supervisor could say too late that the bank is failing or too early to pass the baton to somebody else. That's why there is the second assessment, which is made by the resolution of 30. Indeed, we restart the process considering quickly and the pressure, but with a lot of expertise, I would say, where the bank is. And we confirm or not are, let's say, a judgment on the situation of failure or potential failure of this bank. And in the cases mentioned by Ana Botin, Banco Popular, it's the bank you mentioned. We did the same. Then indeed, if you speak from a legal perspective, a recent case law brought about by the way, not the Banco Popular case, but another one on which we decided to consider that the bank was failing, but we decided not to go for a resolution decision and to let the bank go to a liquidation process. The European Court said that the last, say, legally speaking, should be for the single resolution board. But this is just the technical element which gives the final say to the single resolution board. But in reality, in the case you've mentioned by the bank, yes indeed, we were obliged to assess the situation and to say that, and by the way, this is an interesting case coming back to what Elizabeth said a minute ago. This was not a question of capital. It was a question of implementation of sanctions due to something coming from elsewhere, the beginning of a war in Europe between Russia, Ukraine, invasion of Ukraine, and based on these sanctions, this bank, which was owned by a Russian interest, was not able anymore to work despite an enormous amount of capital. So we were obliged to consider that this bank was failing due to an operational risk creating a situation where the bank was not able to continue its business. And on that one, I think we all agreed between supervisors and resolution authorities to take the right decisions. Very interesting. So that means in future cases there will be this double decision again? Yeah, indeed. Anna, I assume I was not the only one in this room to be struck by the contrast, not on facts and analysis, but in terms of tune between what Jacques de la Lausière gave us about particularly European deposit insurance and what you told us. If I'm not mistaken of the largest five banks by assets in the eurozone, four French and euros of fifths one, so can you give us a bit more about the difference of opinions in that or maybe a little bit of an expanded group? Sure. We don't just measure ourselves by assets, I think. Of course. We measure ourselves by what counts which is customers. And if you take some time there by number of customers would be the number, the third bank between Europe and the Americas and by father largest bank in Europe. So we have 166 million customers. This is really important. We are here to serve our customers, people and businesses. And our mission is to help them prosper. So that's a big point. It's not just about assets. I don't think, I don't have the pleasure of having spoken to Mr. de la Rozier. I don't think we think differently. We're just seeing it from a different perspective and perspective is everything in life. And so I'm seeing it from the perspective that I am entrusted with a lot of capital from my shareholders and I need to make the best decision for my shareholders in a way that is of course regulatory compliant and according to our own risk appetite and all these other things. And that is why I don't think we think differently. I think we would all benefit citizens, companies, the financial system, Europe would benefit for a more integrated Europe. And my colleagues in the French banks and I were very much aligned in what is important. Sometimes we have minor differences but I think we would all benefit from capital markets union, banking union and more integrated Euro. I don't forget the exact, I'm a huge fan of Europe. I say that everywhere I go. I think Europe is the best system we have. As Madame Lagarde was saying before for the supervisory system, Europe is not perfect but it's the best system we know. And I always say when we are at the right side of options in Europe, this works and we just need to get in that range of options to a better growth model. Sustainable growth, responsible growth and again, you know, deposit insurance it's only one of many different pieces that we need to get right. I don't remember now the exact and I see a colleague from the US here you know, what Europe has done since Europe was born and the Euro was born is amazing. If you think about what the US and how long it took the US to get to an integrated currency, I'm sure Mr. Barr knows 150 years, something like that. It's taken us 50 years. So when people say Europe is slow you have to put that in perspective in historical perspective. And so I do think there's many things we need to do together. I do think the single supervisory mechanism has been incredibly important. A huge success story in record time. I think they have achieved something which is really important, which is a great collaboration with the financial system. And so I don't want to go on and on because that's not a question, but you know, don't try to, you know, European banks all want the same thing and the same thing that Brussels wants and I think we just need to get there as soon as we can, but you know, also take a step back and from the perspective of where we have gotten in this time. So again, I think all banks in Europe would like for the integration, not just in the banking system, but within Europe and we just need to go step by step. There's certain things we can do and again, to me, the elephant in the room is how do we get faster growth? That is the biggest prudential social economic issue we have. And so, well, I can go on about how I believe we can get there, but you know, it takes a lot of effort, it's gonna take politics. By the way, we're in an economy that's digital. You haven't asked me this question, but taxes is a very popular theme in Europe. Bank taxes, let's go for that. So I have said publicly many times that I'm a good citizen. Where does Santander makes its pre-tax profit? A third in Europe, a third in North America, a third in South America. Where does that profit go to? A third for my shareholders, a third to taxes, a third and a third to making more loans. So when people say... As a third in taxes, how is it divided between Spain, Europe, North America and South America? It's not that different. Okay. It's not that different. When we make more money, we pay more taxes. For many years, we've made very little money in Europe. Even in some cases, lost money with negative rates. We have a trillion, very much retail, small accounts, we could not charge. The ECB was charging us on the other side. So day one, you pull up the blinds, you start from an easy place. Now that a situation is different. So we paid less taxes in the past in Europe, more in other countries. The average for the group, about a third. When I see proposals from Brussels that we should have a minimum tax rate of what? 15%? Oh, my God. That's the Irishman. So, no, let me say, I am very happy to increase taxes on banks, but banks are the plumbing of the economy. And we gave this number as the Spanish Banking Association. If you take 3 billion more in taxes from the banks, that is 40 billion less in loans when you're already paying more than the fair share in every market. And so I think there's a fundamental rethink we need to do, and I know it's being done and I know it's not easy, where do you create value in the digital economy? Because if my payments are now done by, I've said this publicly, so I'll say it again, Apple. Goldman Sachs, no longer? No, Goldman Sachs is fine. No, this is very real cases we have presented. So, you know, that don't get me going on. Sean, you can respond to the taxes if you want, but I have two questions for you on the legislative agenda. Well, actually three questions. On three different pieces of legislation, which are, I think, all germane to our topic. One is Basel III. Vice Chair Barr here is very busy on Basel III and game in the US. We'll probably talk about it later in this, not in this session, but in this forum. Is the fact that the adoption of the Basel III and game takes time and energy in the US, is there a risk that this would delay the adoption in the EU or not? Second, crisis management and deposit insurance, EMDI, is there any chance that something on that front gets adopted before the end of the current legislative term? But third, which is actually germane to banking supervision, not to prudential supervision, maybe in the narrow sense. The European Commission, to its credit, has proposed very ambitious legislation in anti-money laundering and the creation of an anti-money laundering authority. AMLA, I think this is a major reform, probably the biggest in this term in the REL financial services. And in a way, it's a little sister of the SSM, right? In many ways, because I don't think this reform could have been proposed if the proof of concept hadn't been here with European banking supervision on the prudential side. Is there a chance that AMLA legislation will get adopted in this cycle? All right. Well, I'll start by saying I don't concede defeat on anything for the moment, but I've heard them in order of degree of challenge, let's say. Basel is an easy one. We are now through with Basel. We had a minor technical difficulty which actually relates rather well to the discussion we were having earlier. But that has now been sorted. So we have made it clear we will stick with the 1st of January, the 25th date. Member States haven't made that. I think it's because, of course, there's always a level playing field discussion here. You know, you do these things because you believe that the right things to do. And if the right things to do, you do them. If someone's going to come later, so be it. But it's not a question of us sort of subordinating the level playing field to what's the right thing to do. And so I think I am confident that the US will deliver. I'm confident the UK will also come on board. And then we will have the three large jurisdictions and then it will be done. So we are not moving our dates. I would remind people that we have a 10-year transition on some of these things. And I know André is very happy about them, but, you know, we're not talking in terms of... You can relax because the markets bring it forward. So don't worry about the 10 years. Did he pay you to say that? OK, it's fine. He didn't, but we talk a lot. It's fine. On the second one, which I think is most likely, is the anti-money laundering. I think that's going quite well in one part. So the regulation is going pretty well. I think we will have a... It will probably be settled in the Belgian presidency, though, so it will be carried from the Spanish presidency into the Belgian. Similarly with the authority, which is now, of course, a part of that package, so it cannot come into effect without the authority. That's a slightly more complicated affair. But again, I think we're reasonably confident that we can get the process. It's more a process issue there. We have nine candidate countries or candidate cities, I should say, for the authority that has to be processed. It's a slightly more complicated process than it has been in the past because the court has decided that, in fact, the parliament should also be involved in the decision. I mean, it didn't decide it that way. It decided that the authority location should be named in the legislation. And therefore, in consequence of that, it has to be done in co-legislation, which means the parliament are involved. I don't think either the parliament or the council want to delay the AMLA, but, of course, this will be a precedent setting institutional arrangement. So all future authority... I, for one, think it would be tragic if what you mentioned resulted in the legislation not being adopted, given what's at stake on the substance and the integrity of our market, especially in the context of, frankly, the Russia-Ukraine war. So, to me, one cannot overestimate the importance of getting over those procedural issues. Do you think there is understanding of that at the political level in the member states? Well, it's not for one to the commission telling them. So, I mean, I agree with everything you say. I think I feel a little bit that AMLA is the kind of innocent victim of a car crash. So, I think that this institutional issue has arisen just before we're going to get our location. I think both sides are pretty well aware that this is not any authority here. This is a very particular authority. So, the pressure is on and we're keeping the pressure on. And I'm confident we will get it across the line, but, again, an independent presidency more likely. And then there's CMDI, which is something close to my own heart. Again, there is a path to adoption, I think, in this mandate, but it's very difficult and very, very tricky. And it's not just that the issues are very complicated. It is also that the proposal came relatively late in the mandate. And the co-legislators have had to get themselves organised. They have done but it's still a bit of a call to get everything ready. So, even if we don't get that done in the next mandate, it will carry over into the next mandate and, of course, it will be finished. It will be finished then. There's no risk that this one will not be handled in the next mandate if it misses. And it's really important in the context of Banking Union that this is done. Is there another legislative file that you would like to mention here or... This was my short list of legislations, but you have a ton of more. I could give you 20 more, I think, I mean, we only have a few minutes, but... OK. No, I think you've picked the three who are probably top of the list for us. I feel lucky. Torsten, I'll ask you an academic question. And you mentioned the success... I mean, everybody mentioned the success of, you know, resilience, as you put it. So, there's a supervisory piece of that and we've all paid tribute to it, I think, properly, but there is a regulatory piece, right? Because we implemented Basel III even in a materially non-compliant way, but let's not talk about that. And we had this combination of regulatory tightening and supervisory improvement, right? So, in your model, if I can use that word, what have been the respective contributions of regulation and supervision in the improvement in resilience? Well, I think it has been not just both of them, but also the interaction between the two. Because if supervisors have more tools, more regular tools available, of course, they can also implement them, force banks to adopt them. So, I think it has been kind of individually has been good, but also the interaction. And again, if you think about, I mean, regulations are on paper, right? They have to be, of course, monitored. They have to be enforced. That's what supervisors do, right? And, of course, there's also one thing is the regulation. One thing is actually the letter of the regulation, the other one is actually the spirit of the regulation, applying them as intended, right? And we've seen, again, coming back to what I mentioned earlier with the comprehensive assessment, yes, there were certain regulations in place, but they were not always exactly followed. That's why we had this huge variation in quality of asset quality and, of course, also then the variation between banks in the capital shortfalls going into the... So, for you, is it like 75% supervision, 25% supervision? You're not going to pin me down on that one, sorry. I would say half-half. If you want to, half-half. Well, a third each and then a third the interaction between the two. Pretty good. Okay, so over with my questions and now over to you. May I intervene here? Yes. Because I think this raises a very, very important question because indeed in Europe we have always this debate about what regulation do we need and what is the level of flexibility we let to the, let's say, broad-sense supervisors. And there's attention here. Obviously, there's a question in confidence not only in the regulation framework but also in the supervisory world. Can we trust these guys are implementing these rules, level playing field, et cetera, et cetera. And in my current position in charge of managing crises, this level of flexibility is absolutely key. And this is a message I would like to pass on is that we don't need to craft and carve in stone everything in regulation if we want to find sufficient flexibility to implement successful decisions. And I think again and again it's a question of trust. Trust in the regulatory framework and trust in the ones in charge of implementing it. And the more we trust the ones implementing it, and I think this conference shows that we can trust the ones implementing it, we can give more leeway by giving more flexibility in the framework. And it's absolutely crucial from my point of view. Interesting. Now over to the audience. I have several questions online, but let's start with one question from the room over there. Hello. Is that on it? Tom McElise, Alvarez and Marcel. I didn't know this is Andres going away party, but anyway, I did want to thank him. I'm part of a group. It's the banking supervision market contact group. Andres is not a supervisor that stays in his ivory towers. He's actually opened it up for market investors to come in and meet him on a regular basis and take commentary and challenge from us. Not that he probably takes a lot of it on board, but he does give us the opportunity to listen. And I think people on the group are actually very committed to that group and thank you for doing that. So I think that's an important part of your role, what you brought into the role. So thank you. I had just a quick question. I think three people had mentioned in Europe. I thought that if I had actually gone away, if you look like countries like Egypt and Pakistan and other emerging markets, their banking sector is 60, 70% of their banking assets are in government paper. I think we are way, way less than 20%. So I'm just going to interested that this topic is back on the radar again. That's a good question. So who wants to pick that up, Torsten? One big difference between Egypt, Pakistan on the one hand and the Euro on the other hand, is that they have their own currency and the Euro countries don't have their own currency. I mean, that's at the core of it, right? So I think that's the comparison is not quite correct, I would say. I mean, I don't want to raise any warning belts here. I mean, of immediate concern. It is just that in general that the national bias of banks towards holding bonds of their own sovereign hasn't really gone away, also because there hasn't been any regulatory response to that. So this is the point that I wanted to make. And indeed, if you look at the numbers that are published by the European Banking Authority, you see that the trends have not been downward basically in the last since the entry into force of European banking supervision, the home biases, what it used to be, Anna? I think that that link has not completely been broken, but it's much less, again, in great part due to the single supervisory system. Today the problem we had in the previous crisis is that people did not trust individual banks because of the country, but very importantly, individual banks. Today everybody knows the standards of supervision in Europe are the same. They're super high, they're being effective, so they can trust our numbers. You know, it's a very different scenario. And I think that is a huge difference to what we saw in the previous crisis. We still need more, but I think 70-80% of what concerned market participants is gone. Plus, of course, the levels of government bonds in European banks is way less than in other markets. And so that is also really important. Many other factors, but I think the SSM has been fundamental. And we've tested that recently. You know, a big Swiss bank, very big, very interconnected you know, ended up as we know. So, if you want to test that this is a different, totally different situation. I'm not even going to talk about the increased capital liquidity, I mean the individual strength, but that's not the issue, because that could have been the case before. Now people trust going to Dominique's. They trust the system because they trust the supervisor and that is fundamental. Well, we all mark your words. I think from an academic perspective, the bank sovereign vicious circle is a vulnerability. It's something you assess in terms of crisis scenarios, right? Yeah. And I think if you take that crisis scenario perspective we're not in a very different place from what we were during the Eurozone crisis. The big difference is the resilience. It's the fact that there is more capital. So that, as you said, mitigates powerfully the bank sovereign vicious circle. I'm sorry, it's not just capital. As Elizabeth said, it's much more than capital. Okay. Much, much more. Okay. So there's a question, inevitably, about the Capital Markets Union and I thought we would escape that, but we don't. Maybe to you, Shan, because this is a backward-looking panel and we're getting closer to the end of the panel, but I'd like to have your views. What has been achieved in the department, which is really important? I think a lot has been achieved in terms of legislative proposals. Under my tenure as Deputy Director General and Director General we've implemented two Capital Markets Union Action Plans. There's 20 actions in the first one. 16 in this one. I remember Commissioner Barney's color coded Excel spreadsheet. Yes, I don't use that, but it's still available if you want it. But I think the issue is what's happening on the ground, frankly. So the legislation is in place, but there is less happening on the ground. I think we have to admit to that. And I will say what I've been saying publicly quite a bit now is that when I was preparing for our first EU-UK forum, which was the first we've had since Brexit and the first kind of formal connection structure dialogue we've had with the UK, I was very struck by the fact that they are almost doing everything they're doing. So we had a listing act. They have worked on listing. We have an IPO fund. They're working on IPOs. Prospectus. They're working on Prospectus. Really all the way down. SME all the way down. The issue being that they have a single market already. Between Northern Ireland, Scotland and they have to say it's all in London, but it's there. So if they're doing this even though they have a single market what are we doing? And I think what we're doing is partly just tweaking our existing market, which is the Prospectus, the listing etc. But if you want to build a capital market, like here referred to the president, you've got to do the hard stuff, which is the supervision, which is the accounting, is the taxation this stuff is what builds. I mean if you think what are the characteristics of any single market is common laws in areas like supervision, taxation, accounting, corporate law, securities law, you've got to know this is very hard stuff. But just because it's hard doesn't mean we shouldn't do it. So I think we have achieved a lot in terms of CMU, but maybe we need to do a little bit more of the hard stuff. I'm so happy you mentioned accounting as an accounting myself, but I think this is really an important piece that doesn't get sufficiently discussed. Torsten. Very quick points. Number one, yes, we need to diversify the financial system looking beyond banking. I made this point earlier and I think actually the SSM can actually contribute to this by making the banking system more stable, but also by focusing the banking system more. Which actually I want to pick up on something that Mr. Delagoissier had said. I mean there is a tendency from a very low level, but the share of non-bank financing is increasing for corporates also in Europe. Again, much lower level than in the US, but it is increasing, which of course raises the question of ultimately supervision and regulation. I think there is a little bit of a gap, and I take your points that you made on the ESRB, but I think one important task that I would see for an institution like the ESRB, and I have to just to mention that I'm also part of the structure, so these are the structures I'm a bit biased there, but I think for macro potential supervisors it's always to look beyond the current regulatory perimeter, to always see potential new sources of systemic risk that might come up. So again, both from the growth and from the systemic stability side, I think that's absolutely critical to look at. Actually I was listening to Jack Delagoissier on the ESRB, and I personally don't disagree with what he said, but I think what you mentioned is important to scientific advisory council or whatever it's called of the ESRB. Yes. In my mind has made a much bigger contribution than the ESRB itself. Actually this is the... ESRB is unique because actually I mean I'm part of the AC. And there have been several reports of the scientific advisory council that have I think made a significant policy impact when I think of the report on over banking the report on sovereign exposure I think they have framed the debate in a big way, so I'm happy you mentioned that. We have three and a half minutes left, we want to end on time, but there is a really nerdy question coming online and since we are all you know, closer to nerds when it comes to accounting and capital, I cannot resist asking that one probably to you, Elizabeth. I'm reading the question, jumping to credit risk and IFRS 9 what do you think of overlays that represent a large part of impairments exercised on expected credit loss models? I actually like overlays and I might surprise you by saying that we found during the pandemic that we were in a whole new cycle that had no historical data associated with it that could be relied on, so the answer was to put appropriate overlays in place so that institutions could appropriately assess their credit risk I would add that now we have some experience with the overlays it's essential that institutions are testing them and beginning some back testing and that we as supervisors are looking very carefully at the adequacy of them and whether they are being appropriately applied but I like overlays. There's time for one last question from the room if anybody has a crisp question on the big picture take your chance if not one two three if not I'll take a big picture question from the online audience and I'm not sure for whom it is, maybe for the supervisors here, so Elizabeth and Dominique, how can further banking consolidation be combined with too big to fail concerns? I think that's a big one I can start when I look at the consolidation that happened in the US after the great financial crisis and I look at the consolidation that's happened in Europe after the great financial crisis there is a chasm between the two experiences we have a long way to go in Europe I think to improve our consolidation across borders and having capital markets union would certainly help with that. I think there's a need to have more consolidation in our market we have overbanked markets, we have business models that are sluggish we have vulnerabilities that exist as a result of overbanked markets starting with some consolidation would not really cross over into the too big to fail situation we're very far from that picture in Europe actually I'd like to hear Dominique on this but maybe also very briefly at the end Anna because he's the Consolidator. I was going to put up my hand but I'm looking at the we have less than a one minute so please be concise well there is a misunderstanding about this too big to fail notion it's not about don't sizing the size of the banks it's to find other solutions than public money too big to fail to be saved by public support we are always missing the last words in this sentence so the answer is coming exactly from the resolution framework saying well okay too big means adequate treatment very clear I won't have time for the follow-up question about credit trees but that will be for another session Anna I don't have the answer to that question but I can tell you Europe needs larger banks because our industry is being fundamentally disrupted big time and this is going to accelerate we need the capacity to invest to reduce price to consumers and finance the economy so we really need to do something about it I keep on hearing European champions we also need banks in Europe to be at the level of the US banks ten years ago the largest bank in Europe by market value in this case was Santander today the largest bank in the US by market value is the addition of what 15 largest banks in Europe and of course even the big American banks can compare to the big tech platforms which are going to be the biggest competitors and so we do need larger scale among European banks but as we've said ain't going to happen anytime soon pretty powerful way to conclude Torsten if you have an even more powerful way just directly to follow up on this too big to fail for whom is it going to be the nation state or for Europe and I think that's a huge difference and I think that's yet another argument to push forward with the banking unit let me take that as a conclusion temporarily and ask the audience to thank our panelists for what I thought was a very animated