 conference. My name is Susan Carroll and it's my pleasure to be your emcee for this two-day event. Our topic is a very timely one. Ten years after its conception, has the banking union stood the test of time? Well, we're going to find out over the next two days. But before we officially start, just a bit of information from me, particularly for those of you joining us online and we had more than 600 people registered. Thank you very much for that. Just to tell you how you can interact with us, we will be taking questions via Mentimeter. You can see on your screens details of how to submit them. For our in-person audience, I think the traditional raising of the hand still works just fine. You can also follow the discussions online on Twitter using the hashtag SRBECB2022. Finally, a hint to all of our speakers, we are on the record. Our speeches and our discussions are being streamed live on the SRB and ECB websites and also on YouTube. Now let's get started. It's my pleasure to hand over to our joint host Andrea Enria, chair of the supervisory board of the European Central Bank for some opening words. Mr. Enria. Thank you. Thank you very much. I'm really very glad to welcome you to our first conference, joint ECB and single resolution board. We have been thinking about this for a while and finally we managed to do it and finally we managed to do it in person, at least in part, and also at the exact time of the 10 years anniversary of the conception of the banking union, which was proposed at the European Council at the end of June in 2012, so 10 years ago. However, the single supervisory mechanism was not legally enforced until two and a half years after that decision and it was after four years that the single resolution board was legally operational. So from the point of view of our age, the two institutions, the two pillars of the banking union have been operational for much less than a decade. But yet I think that we can say that we have achieved quite a lot in this period, the considerable reduction in non-performing loans, the risk of the bank's balance sheet from 8 percent NPR ratio in 2014 when the ECB started its tasks to the end of last year, 2 percent. And also the supervisor response to the crisis, not to the pandemic that was very, very fast and enable banks to continue supporting corporates and households also in the first very difficult times of that crisis. And the empirical evidence shows that that space that we gave as supervisors was useful, was used by banks to continue supporting lending and the economy as a whole. Also, the decision not to distribute dividends, to recommend not to distribute dividends and to create operational relief for the banks I think was very, very useful at that time. But what for me was really key was that for the first time there was a joined up response. So supervisory, monetary policy, fiscal response, regulations, everything moved in the same direction showing that a symmetric shock was actually met with a comprehensive policy action at the European level for the first time. And also the SRB, of course, Elke will say much more than I can, but established itself as a strong pan-European resolution authority. And this was reflected not only in terms of banks preparedness, so through resolution planning and a minimum requirement for own funds and eligible liabilities, but also swift interventions in the few cases, luckily, that we have banks that we had failing or likely to fail in these first years of the banking union. So this unified response would not have been possible if it was not with the banking union in place, would have been unthinkable really. And I want to stress that, and that's why this meeting for me is important, is that close cooperation between the SSM and the SRB has been integral part of our efforts throughout all these years. Take also our joint handling of recent crisis cases such as Baerbank, I mean, given the limited time available to respond to fast moving crisis situations and the relatively complex, let's say, decision making processes that we have, it would be impossible, I would say, without effective cooperation to manage the orderly wind down of a bank. And this consists not only the quickest change of information at the time, but also the consultation and cooperation between the two authorities as provided by legislation throughout the whole process. And this cooperation is not only an issue of the last days of life of a bank, it's the end point of a coordination process that starts much earlier, as set out also in our institutional memorandum understanding. To make sure that both institutions are on the same page when push comes to shove, the ECB is consulted on the resolution plans that the SRB prepares, while the SRB provides feedback, of course, on the recovery plans of significant institutions that the ECB is responsible for. And our information exchange is not limited to crisis cases, but we are also sharing insights on key system-wide vulnerabilities. We, for instance, now work together in the extended contact group monitoring developments following the aggression of Russia in Ukraine. And we are exchanging always bank-specific information, also matters such as ML. So we have come a long way. We have certainly not yet reached our final destination. The banking union remains incomplete in several respects. For large banks, we have a uniform and effective crisis management framework in place, but the same cannot be said for small and medium-sized banks. Prudential regulatory barriers to a truly single European banking market remain in terms of what we call home most. I hate referring to home most for something that happens within the banking union, but still what we improperly call home most issues within the banking union. And the third pillar of the banking union, of course, a common deposit insurance scheme is still missing. All these issues were discussed at the Eurogroup meeting last week, but an agreement on a roadmap to complete the banking union proved elusive once again. These are complex political negotiations that go to the very heart of the kind of union we want as European citizens. And here I'm not talking only about the banking union, but also about the European union itself. It is only natural that there are different viewpoints and that negotiations are proving complex. But as I say the time and the gain, I'm today more convinced than ever that we cannot stand still while complex political negotiations play out. This is why we have, I, my colleagues, the colleagues in the SRB once and again explored avenues to maximize the full potential of the legal and regulatory framework that we currently have in place. This, considering in particular the prudential regulatory obstacles, still impeding the cross-border integration of the U banking sector. More recently, I raised also some, you know, proposal for incremental reforms of our crisis management framework, in particular for the resolution of mis-sized banks. We regularly discussed these issues with the LK, with the colleagues at the SRB. And I believe we share a lot of views on a number of issues as a result of our common experience with crisis cases in the first years of the banking union. These reforms should, in my opinion, include an expansion of the pool of banks which qualify for resolution, an expanded role for DGS for deposit guarantee schemes, other than their paybox function, boosting the ability to fund on a list of spaces the smooth exit from the market, also smaller banks, a widespread use of the purchase and assumption transactions that along the years have proved to be the cornerstone of the U.S. successful framework for crisis management resolution, and therefore a harmonized framework for administrative liquidation. I mean, they're all very consistent and part of a package, in my view. And again, even though I was disappointing as everybody else here in this room that there couldn't be broader agreement in last week, I take comfort from the fact that the finance ministers agreed to improve the resolution framework, mostly along the lines that we discussed with our colleagues and which seems to be important improvements based on the experience that we had so far. I'm about to give to the floor to Commissioner McGinnis to kick off the conference with her keynote speech and would like to underscore that I personally look forward to cooperating with her, with Elke, with Sean, offering all the technical advice my staff can provide for a comprehensive review of the crisis management framework in order to make it more effective. At the ECB banking supervision, we are acutely aware that an effective framework for market exit that does not impair financial stability is key for an efficient banking sector able also to compete on a global scale. And I'm reassured by the fact that at least this prong of the regulatory reform program has been mandated to the ordinary legislative procedure with initiative from the Commission and agreement between the colleges later, because I believe in this way the entrenched political obstacles, the red lines that we have been hearing about in this period go in the second line and we have the appropriate decision-making process to try to move ahead. I'm sure that these two days we will be hearing many analysis and proposals on how to improve our current regulatory framework both for the SSM and the SRB. And again I'm sure that discussion will be extremely insightful and fruitful even though the holy grail of the single deposit guarantee scheme will not be at the center stage of the table. And I'm very much looking forward to the discussion and the debate. So after Commissioner McGuinness keynote speech, today's first panel, moderated by Laura Noonan, will discuss how to move crisis management forward and look forward to the insights from our panelists, Sean Berrigan, Elke, Koenig, Peter Simone, and Irene Tinayi will offer to us. The following panel will have its size firmly on the future. Jennifer Baker will moderate the discussion with Patricia Boydens, David Martin Lopez, and Marlene Piccaro on how the banking sector might look like in 2040. Following tomorrow's keynote speech by Johan Thais, a topic that has become even more salient due to the Russia's war in Ukraine will take center stage, operational resilience. The ECB and banks alike actually have already been on a high alert for cyber risk and Russia's waging war on Ukraine with increasing risk of cyberattacks as only heightened our and the bank's vigilance in this area. While so far cyberattacks were primarily financially motivated, there is now a threat that aims at destruction of critical infrastructures, trying to cause as much disruption as possible. Elena Carletti, Elizabeth McColl, Christian Ossig, and Fernando Restoy will explore ways of safeguarding banks' operational resilience in these turbulent times in a discussion moderated by Raymond Franken. And Elke will tomorrow conclude the conference with her closing remarks. Before I conclude this short introduction, allow me to thank Elke for the very fruitful cooperation along these years, both when I was chairing the European Banking Authority and now as chair of the ECB Supervisory Board. I've already praised the level of cooperation and information sharing between our two institutions, but I would also like to thank Elke for our personal interaction and cooperation during this period. She has been an outstanding first chair of the Single Resolution Board and I know from personal experience that it's not so easy to set up new institutions and especially so if you need to take all difficult challenges in the first years of your life. And as I mentioned, this is the first SRB and ECB conference, but also the last that we lost together. Elke will leave at the end of this year, I will leave at the end of next year, but we still have full six months to collaborate closely, hopefully not on concrete crisis cases and the close collaboration between the SRB and the ECB, I think is really is a strength of our institutional framework. And this has been built also through the, I mean institutional, I mean those of people and the good relationship between the leadership of the two institutions, which has been built by Elke, partly by myself, is something that I think we need to treasure and preserve in the years to come. So thank you very much for your rotation. Thank you. Many thanks Mr. Enria for introducing our conference so well. As you reminded us, the Banking Union, well not complete, certainly has plenty of room to develop. And in this light, we have a keynote speech from the ideal person to set the scene for our discussions today. And she's kindly agreed to take a couple of questions afterwards, so please submit them now. Please welcome Maread McGinnis, Commissioner for Financial Services, Financial Stability and Capital Market Union. So very good afternoon, everyone. I'm not sure if you saw a photograph been taken over there of four people with a sign over them, the test of time. I'm a little worried about where that photograph will end up with that heading on it. But can I say the actual theme of this conference is really important because we are marking 10 years, but we're not resting on our laurels because we have a lot of work to do. And to some extent, if you hear things twice, Andrea, you have said much of what I want to endorse. But I think that's no harm because we need to be very clear and very straight about the path ahead and about the need to go on this journey, even if there are little difficulties and twists and turns. So very happy to be here because this is a topic that's hugely important for the European Union. And as you know, it's often in times of crisis that the European Union does its best. It deals with crisis because we absolutely have to, and we can take very difficult decisions that would not happen, let's say, in normal times. And we can be very ambitious and look what happened during the COVID crisis. And I suppose the Banking Union, like many of these big European projects, is one of an ongoing story of maybe small steps, some big leaps. It's a collection of initiatives launched in the aftermath of the global crisis and to ensure greater financial stability and to strengthen our single currencies through deeper integration of the euro area banking system. If we look back to a decade ago, the global financial crisis and then the euro area debt crisis raised fundamental questions on the very future of our banking system. To contribute to financial stability in the euro zone, it became very clear we needed a strong and safe banking system working easily across national borders with less ties to individual countries. So over that past decade, we embarked together on the journey towards our ultimate destination of Banking Union. We considerably changed our banking sector and shaped a whole new regulatory and supervisory architecture for our banking system. But we're still on that journey and we're not there yet. We have not reached our final destination. But it's important to mark the fact that we have made significant progress already. So the first and second pillars of the Banking Union are up and running. The SSM brings clear benefits in terms of the level playing field. It gives confidence that banks are supervised in a consistent manner across the Banking Union. And there have been continuous progress on crisis preparedness, improving the resolvability of banks and building up capital buffers. Our capacity to handle the failure of European banks without affecting financial stability has improved markedly. And a common backstop to the single resolution fund will soon enter into force, boosting confidence in the bank resolution framework. We've also put in place a single rulebook for banks across the single market. And at its very core are stronger capital and liquidity requirements for banks, improved deposit or protection rules, and rules to manage the recovery or resolution of a failing bank. And indeed, the recent case of the Court of Justice in the Banco Popular case confirms the robustness of our harmonized resolution framework and the strengthening of the powers of the SRB. And we see results. We see good results. Our banks proved resilient during the pandemic. Andrea, you referred to that. They continue to provide liquidity and services despite lockdowns. And this helped to deliver many government measures to support the economy. Of course, the consequences of the Russian invasion of Ukraine at this point in our financial system, we are vigilant, but they are under control because our collective efforts thus far has helped to make our banking sector stronger and safer. And now to the core of today's conference, the test of time, banking union 10 years on, will our framework pass the test? And I think we all know that there are new risks and challenges emerging, not least geopolitical tensions, macroeconomic risks, the climate crisis and the digital transition. Now, these developments, some bring opportunities. The banking sector will have an important role to play in mobilizing the investment needed for this twin climate and digital transitions. And the shift towards more diversified energy sources. And this is an absolutely urgent topic. But the uncertain economic and geopolitical environment also carries risks that could test the resilience of our banking system. We know inflation is now a reality. Interest rates are expected to increase. And while the COVID crisis is no longer headline news, it has not gone away. Our banking system would be further strengthened to deal with these challenges if it could operate on an integrated EU market backed by an institutional setup that provides adequate safety nets. So despite the impressive progress over the last 10 years, there is a lot of work which we need to do, and we need to do it together. Because we're still missing an important piece of the framework. A decade on, the third pillar of banking union, a European deposit insurance scheme is still missing. Edis would increase the resilience in the overall system by pooling some funds at banking union level. A political agreement to establish Edis would require progress on other outstanding elements of the banking union. A comprehensive work plan for the finalization of banking union didn't emerge from the Eurogroup. We were hoping it would. I think everyone in this room was hoping that it would. But the determined efforts of the Eurogroup president, Pascal Donahue, ensure that the Eurogroup took a pragmatic step forward, focusing on improving the existing crisis management and deposit insurance framework. I always see the glasses half full. And we will use here in the commission that pragmatic step forward to address improvements in crisis management, because we know the framework would benefit from that. We will work on a legislative proposal to reform crisis management and deposit insurance. And this reform would aim to improve our capacity to manage bank failures, while maintaining financial stability, protecting depositors, and safeguarding taxpayers' money. Our goal should be to ensure that any bank can exit the market smoothly. However, we do not underestimate the challenges we will face to reach agreement on the reform. I've said repeatedly, there is a lot of heavy lifting to be done. And we will only succeed with a clear commitment from our co-legislators to engage constructively in those negotiations, and show the necessary willingness to compromise. As I'm learning, the commission is well used to taking up difficult challenges, from the response to the pandemic, to the immediate response to the Russian invasion of Ukraine. And we will continue to play our part in driving banking union forward. Our collective destination remains a complete banking union. And if that's the one message I want to get across, that is the message coming strongly from us in the commission. It may not be fully in view today, but I believe we will get there, because we have a signpost in the right direction. So I hope this conference allows us to have these deep discussions about what is necessary. I gather I'm going to be quizzed now, but I want to thank you for your attention, and indeed for the opportunity to be with you. Do I stay or do I go? You stay, you stay. That's a line in the song, if I recall. We can have a duet. Thank you very much, commissioner, for your speech. We have a few questions coming on online, and then we'll turn to the room. So the first question is, and I don't, this is not coming from Elka, I believe. Are you pleased with the work of the SRB to date? Yes. And do you see any role for the SRB beyond resolution in the future? Well, let's see what comes of our discussions. I mean, I think things evolve. So I don't think you should say anything. Things evolve. So I don't think you should set everything in stone and say this is fixed. I would join in the kind remarks to Elka. You know, Elka has been so determined that we would make progress, and you've made huge progress. So in these days where there is so much change in our financial system, collectively, then I think even in our regulation, we should not say this is done, and it will not need to be looked at. So I would rather say that we need to be open to what might be necessary. Great. And that, I think, brings us on neatly to the next question. If there are any clear milestones for the completion of the Banking Union, or what's next for the Banking Union, as Mr. Enria mentioned, this plenty of room for development in the existing framework. Look, I think we all know the steps, and we're going to take the one step that we've been tasked, if you like, by the Council, and that's on crisis management. And when I said this was a pragmatic step forward, that's important, because it gave us a signal that while it was difficult to go much further, those in the room realize we have to go much further. And it's a question of time. So I won't say dates or times, but we know the elements of a complete Banking Union. And what it will need, I think, is a collective understanding that everybody will have to give a little, and that we will gain a lot from that. So that's my conviction. It's better not to give dates unless you're absolutely certain. Indeed. Thank you. Is there anybody in the room here in Brussels who would like to ask a question of the Commissioner? If not, I have more online. I thought I was free. One last question, Commissioner. I know you don't have much time. Despite your commitment, unfortunately the Banking Union remains incomplete, but could you explain why it is blocked in your opinion? Do you think it's because the Balian rules, for example, aren't fully respected in the Eurozone member states? I think it's much more, in a way, basic than that, to some extent. We did what we had to do in a crisis, and we just didn't finish it. And I think now, in a sense, if you look at our banking sector, it's more nationalized than it was indeed, even in the past. So I think it's about political willingness to understand why a colleague across the room has an issue, and that if you give, they can. And I think there was a sense in the room, actually, last week, that we could do that. But I have to respect the fact that those who are present just couldn't take that huge leap forward. But I think the President of the Eurogroup, indeed, maybe from Council this week, the European Council, will keep this very much in the radar, because there's great opportunities from completing Banking Union, and why would we delay? Thank you. Thank you very much, Commissioner. Please join me in thanking... Thank you, it's very, very good questions. Thank you very much. And now, let's take a deeper dive into the outlook for crisis management and the resolution framework with our next panel today, which is moderated by Laura Noonan, Financial Regulation Editor of the Financial Times. And Laura will introduce her panel. Over to you, Laura. Thank you very much, Susan. I'm delighted to be the third Irish person that you guys have out of the three speakers so far. And I've got a fourth Irish person to my writer, Sean Berrigan, who most of you know is... What's your full title? I know it's got a lot of words. Sean, maybe you'd like to share your full title. Director General for Financial Services... Sorry, Financial Stability, Financial Services and Capital Markets Union. Excellent. That's Sean. Fisma will do, okay. Well, I did have a ban on all acronyms for this panel. Stick with this one, huh? All right. And then, next to Sean, we have Elke Koneg, who is... Do we call you director or chair of... Chairperson or chair? Chair of the Singularization... Whatever you wanted. If ever you like it. Then we have Peter Simone, and you're currently representing the Association of... What's the... I'm the Managing Director of the World's oldest global banking network, the World Savings and Retail Banking Institute, 98 years old, and the European Arm, the European Savings and Retail Banking Group. Thank you so much. And then, next to Peter, we have Irana Tingali, who is chair of the European... Of the EU's Committee on Economic and Monetary Affairs from the European Parliament. So I'm very delighted to have all of you guys here. As everyone in the room and in the audience knows, this isn't quite the conference that I think some of you expected to be a week ago when it was meant to be something quite celebratory, and now I guess it's more a point for reflection as to where we are, where we go from here. Sean, I'll start with you. I mean, you've been here from the very, very, very start of this. We're now more than 10 years into the banking union project. We had a very good overview from the commissioner earlier about the things that have been achieved, but did you expect to be further along by now, by 2022? Did you think we'd be done? It's a difficult question to answer. I think possibly at the beginning, yes, but as time has gone on, I have become a little bit more, let's say, realistic about the pace of progress. I mean, I think there are two ways you can measure progress in a project like banking union, and this sounds a little bit kind of trite, but you can measure progress by how far you've come from the start, or you can measure progress by how long you still have to go to get to the end. Now, I think if we're fair, we've come a lot longer along the way. So we are more than halfway. I think the very fact we're sitting here in this conference with Andrea and the SSM, having organized an Alka here for the SRB, shows that we have made a lot of progress. We have a single rulebook, which we continually seek to improve, but it's largely there. And I'll come back to the improvement in a minute. But when I used to, 10 years ago, bore everybody about the benefits of banking union back then, and I can bore you again about them now if you want. We always had these three pillars, you remember, and the three pillars holding up the banking union, and two of them at the SSM and the SRM, and the third pillar was Edis. So I think the story is that I don't think, I'm not disappointed, but not further along. Of course, I would always like to be further along, but I'm realistic. But I do think unless we get the third pillar in place, the banking union, although it works well, will not work optimally. And that's why it's important that we continue to push to have the third pillar in place. And is there any argument that the third pillar is just no offense, but like never going to happen, and we should just make the best of the two pillars we have and make those as optimized so we can get them? Because the third pillar, some of the differences are so entrenched that you could just be throwing good money after bad spending more time on us. I can see Elka shaking your heads over you in next. No, I don't think so. I mean, I think you never want something that functions so suboptimally. So this is working well, but it could work better. And I don't think it's true, in fact, that we can never get to the point where deposit guarantee schemes at European level become sensible and become acceptable. We're not there yet, but I feel that we continue to make the arguments we will get there. And I think even what we're going to do now in terms of crisis management, I can give you a sneak preview, is going to very quickly reveal how even the improvements we will make in crisis management will not be the full amount because the system could be even more robust if we had a third pillar. So the arguments for the third pillar aren't going to go away. I mean, their obstacles need to be removed and they're difficult to remove, but the arguments why you need a third pillar will remain. Elka, I'm going to bring you on this point. But first of all, a quick show of hands from the audience. How many of you think we will get a European deposit insurance scheme? Raise your hands. Okay, we have Franny Moon, who is not able to see the audience. We have a very healthy, I'd say 80%, although I'm not a math... It's a good majority. The good majority of the room thinks we'll get. I should also say, sorry, those of you who are online, there is an online forum where you can ask questions. I think someone was going to give me an iPad so I can see those questions. So yeah, I'll get them from the iPad. Anyone in the room, just if at any point you want to ask a question, just raise your hand and we'll get a mic to you. Elka, your defence of the need for the third pillar. I think we need a third pillar if for the simple reason of the word that Andrea hates, that I hate, home host. Because, so far, we have a system where you have a European supervision, you have a European resolution scheme, but when it comes to deposit insurance, you are back to nationalising. I could actually make a very simple argument and I sometimes believe economics count. We have in Europe now, or we are building up the Single Resolution Fund, 1% of cover deposits. We are building up, or we have built up, the DGSs, 0.8% of deposits. Quite a healthy number, 1.8% in total. This is nicely comparing to the US, it's 2% of deposits in the US, but our system has one European port and 21 plus national ports. So, and this is an argument where you could say it would be by far more efficient and it would also protect the member states far better if it were a European system. The European port is fully now mutualised, the rest is fragmented. This is one argument, but I would also agree with Sean. I think we had been, and I would have hoped for more progress, like always, but we have been fairly close to moving the first step into EDIS. It was just one step too much though. That's why when we now work on, when you now work on CMDI, you will get back to the same topics on harmonising as a pre-step for then hopefully mutualising it. I'm optimist by nature, otherwise I would never have taken up this job. So, do you think we'll see a deposit insurance guarantee scheme or the EDIS within your term? I think we'll see it. My term ends in less than six months? Yes. By now, no. You won't see EDIS during these six months. I'm not even sure that you will see it. Will we see it during Andreas? During the term of my successor, but we will see it at some point. During our lifetime of... Your teen version of FDIC, well, I hope to live long, so I hope to see it. Thank you very much, Elke. Peter, I'm going to bring you in here. How important is EDIS to your member, Mike? We are so diverse as the European discussion is. We have members who are fully in favour of a fully-fledged system, and we have members who are completely against it. And the discussions that we have here show that within Europe, there is not this bright consensus about this topic, as here in the panel and in the room here. The problem, from my point of view, is that EDIS started... had a very, very bad start. I will never forget the day when the five presidents paper came up. I read this passage and you asked... Did you write this passage? I read this passage and I want... I wondered how something like this could happen, because here was suddenly on the table a final solution presented as the only possible and acceptable. And being in politics for many years as the five presidents too, I asked myself, do you really start a political discussion like this? I think what we can all agree on is that we have to have the highest trust of dispositors that we can reach. Looking what is necessary for this, I just want you all to remember that the mention 0.8 for the DGS, 1.8 together with the BRRD, is less, much less than the commission in her first proposal for the DGS has proposed only for the DGS. Just to remember, 2.5, that was the starting point when the commission told us all to reach trust within our countries in the population of Europe at the markets, we need to have not less than 2.5. 0.8 we ended up, 0.5 in France because of a concentrated banking market. But we have more trust than before even if it's just 1.3 only for 80s. So what this showed is to us, often it's not about only pure figures and only about pure systems. It's only about do the people trust in something or not. And we all know that if it comes to the hardest, hardest case, no deposit guarantee system in this world will hold. Not the US system, not ours. But as long as people trust that everything is done, that they are in person protected, nothing happens, you get no bank runs, people keep calm. So we should, if we really want to bring a process forward that takes into account our all key interest to protect the deposit, the depositor best is that we should go all back to zero and think what is necessary to gain trust. And what do we urgently have to avoid to lose trust in systems where we have a lot of trust? In our membership, we have members who think it is very important for many reasons, for the home host problematic, for the trust in their countries that we come to a fully fledged systems. But we have also a member who say, in my country, in IPS systems, for example, are more deposits than in the first 20 European states deposit accumulated. If you damage trust in our system, just a little bit like this. What do you win for the stability of the overall system? So both arguments have a legitimate background. These are both legitimate positions. If we want to go ahead in Europe, we should get out of this front lines where we are in now since years, because then we will never end up good. When I say we should restart last half of the sentence, I really mean we should go back to something that the former Chancellor Bismarck said in the 19th century already. He said, if you want to understand foreign policy, and it's exactly the same situation here, you have to put yourself in the shoes of the one who is standing in front of us and look at yourself and try to understand you, then you understand him and then you get together forward. I think acting like this is the only possibility to get ahead. So there's lots there to pick up on. I can see Elka and Sean are nodding at various points that they want to come in on. First of all, I want to bring in you, Irina. From your perspective, how difficult or how easy is it going to be, do you think, to get agreement on what Edis will look like? Well, we've seen how it's not easy, you know, definitely. So I think we all wish to be here celebrating something and actually... Possibly not all of us. Well, maybe, but I think most of the people that have been working in the European institutions trying to achieve this advancement of the Banking Union are a little bit disappointed. I was disappointed when I read the conclusion of the Eurogroup, although I appreciated the effort that Pascal Donohoe put into this and I really appreciated what he did, but I was, of course, disappointed by the outcome where basically they agreed that they disagree on this and they only agree on the fact they will just kick the can along the road, the endless road of the Banking Union. So I don't know, I've been wondering myself how we could change the framework and how we can achieve the result because most of the people still, you know, agree on the fact that we need to advance on the Banking Union, but apparently there is something about the journey that we've designed or maybe the way it's been framed or proposed or the way we've negotiated. And actually if we look at it, it has been changing along the line. I mean, for example, at the very beginning, we always talk about the three pillars, but at the very beginning there was supposed to be a fourth pillar of the Banking Union with the Bank Structural Reform. That is another piece that fell along the road during the last eight years. And that was supposed to be a reform of the Banking System that aimed at, you know, at the time, there was the issue of the too big to fail and this was seen as an important move to reduce the risk. And then this was abandoned eventually. Of course, Parliament has its own responsibility in that. I was not in the Parliament at the time, but I know that Parliament has a big responsibility on that. But my colleagues who were there at the time, they told me they didn't get any big signs of sorrow on the side of the Commission, which withdrew the proposal right after. I might be wrong. So I'm happy to engage. So we started to think in terms of, you know, how can we achieve the Banking Union and still reducing the risk? We started to look at NPLs, for example. So we had the action, the roadmap on the NPLs. The calendar provisioning. So we started to move a little bit the target and then we started to discuss about the sovereign risk. So we started to move a little bit the target. And then the funny thing is that what they, you know, we also changed the narrative. At the beginning, for example, the Banking Union, the possibility of having really cross-border big groups and exchanges was the mean to break, for example, the sovereign bank link, you know? And then it became the opposite. We, the sovereign became the mean through which achieving the Banking Union. So we completely changed the approach. And I think we have to think about that, because probably the way that we framed things that made the road narrower and more rigid rather than trying to open up. So we started to eliminate instrument to change the narrative, to change the final objective with the means through which achieving the objective. So I think this also ended up narrowing down the room for maneuver and for negotiation. So maybe now it's time to restart and trying to reopen the field and open up a little bit the possibilities and maybe be more creative about how we want to set up the roadmap to achieve what I think everybody agrees is something that we badly need. So are you talking about a more, in terms of the design of what Edis might look like a more flexible approach to what it might look like maybe a little bit different in different countries? No, I'm thinking about the whole thing of Banking Union because I agree on the fact that it's not that easy to tackle these things separately and trying to say, okay, first we do this and then we do that and then we can do. This tap-wise approach, it proved to be very, very difficult especially when what was supposed to be the final outcome becomes a prerequisite step to get to the next step. So we are mixing up a little bit objectives with instruments and people may feel that of course as usually happens in negotiations someone is more interested in step one but not in step two and vice versa someone is not interested in step one but is interested in step two but it says, okay, who grants me that if I agree on the step one then the step two will arrive because you know what sometimes what happens is that I make a sacrifice on what it's my ideas and I agree on step one thinking that we will get to step two and then step two never arrives. So I think that we need to be a little bit more holistic in the approach of the Banking Union and trying to find a way to keep things together and find a new way of negotiating but I don't have the right answer otherwise I would be in a different position maybe if I had all the answers to how to handle that but my sense is that it's really trying to be a little bit more creative in how we approach it. So Sean from your perspective at this stage in the game 10 years on how easy is it to reimagine some parts of Banking Union in a more holistic way and to do what Irina is talking about? Quite I mean if I'm honest because I mean I agree with Irina fully but in a way the process we've just come out of is exactly that process where we tried to identify all the remaining steps in the Banking Union tried to approach it in a holistic way but it hasn't worked. That was the work plan essentially was to lay out all the various elements we wanted to put in place and then move in parallel. That hasn't really worked out. It was a heroic effort by the President of Eurogroup but it simply wasn't possible to overcome the many obstacles. So I think in fact now where we step is we are going to make a step forward in one of those pillars which is crisis management but what we will discover is that everything in Banking Union is a bit connected to everything else. So when you make this step forward you're going to find that elements are not there that you would like to have there and I think Edis is one of those elements we will find that would be very useful to have if you're trying to build a fully consistent crisis management framework. But I wanted to come back to some of the comments on Edis and the passages in the five presidents report which I can't remember it's 10 years ago maybe I did write them maybe I didn't I can't remember but what we put on the table as a proposal in 2015 was in fact something which was all that came later it was a complete move from liquidity to full risk sharing. It was however a consistent step you just went from A to Z there were no breaks in the middle. What happened in the discussion of course that people said they quite liked the step from A to M but didn't want to go any further and others wanted to go a bit further so that all became another discussion about liquidity versus risk sharing etc but the first proposal we put on the table was internally consistent and had all three moving from as you remember liquidity to co-insurance ultimately full risk sharing. So there's another effort which didn't work but I think when we put it on the table the idea was not to undermine confidence in national deposit schemes quite the contrary it was to reinforce confidence in national deposit schemes because I mean I am one of those people who believes that if you have a single jurisdiction like banking union then one of the characteristics of a single jurisdiction is single or uniform protection for depositors. So every depositor should feel as protected as every other depositor irrespective of whether they're in one part of the union or another part of the union and that's what Edis was about was about leveling off and making sure that everybody ultimately has the same level of protection. I think the problem arose was of course that there was a sense that the risks within the union were not randomly distributed let's say and that some parts of the system bore more risk of accessing Edis than others and there was a sense that some parts of the union would be subsidizing other parts of the union if they joined in a kind of mutualized framework. So we had the risk reduction risk sharing debate i.e. we needed to reduce all the risks in those parts of the union which were perceived as being more riskier so that we could then share risks. That actually was delivered I mean the risks have been reduced they were identified in two respects palatable liabilities available in banks and non-performing loans and on both of these metrics the risks have been pretty much removed so that risk reduction risk sharing story is over I suppose that was why I suppose some of us were a bit optimistic about the Edis discussion because the risk reduction the risk sharing debate had ended but it wasn't to be I mean there are still other issues around that but as I said I still believed as we go forward and work on crisis management this one step we're going to find that issues in the other pillars will re-emerge so Edis will be missed from the framework home post issues will most likely re-emerge in this context as well so we will um we I was never fully convinced of the kind of holistic approach in the sense of moving together at the same pace on all elements it's very difficult to do that kind of general equilibrium stuff but I do believe that you even when you move sequentially you will reach points where you have to stop and let the other parts catch up so I think you know what has come out of the euro group is still a very good result we will crisis management is a very noble area to be working in if I may be honest it's a very important area to work in as we know well as we know well but we will we will discover that other parts of banking union will be needed thank you so I certainly do want to spend a fair chunk of this on crisis management but we do have quite a few questions around Elka one for you from the audience who says is there not scope to use the billions and billions stored in the s or f to become part of the europe wide dgs what do you do with the s or f as it sits idle waiting for a crisis well I'm not sure whether I'm so unhappy that it sits idle waving for the moment because it means that we didn't have a crisis where we had to even tip in this and like the commissioner said in the beginning I think we've proven that we can resolve banks but I'm not sure that our target should be can we resolve five per year it should always be the exception and not the rule to resolve banks but I'm pretty clear no for the time being it's very safely and I'm looking at our vice chair who is responsible for managing the fund it's not a pleasure to be an investor for very safe investments in this environment we have made the point currently or recently to say if you really want to take a first step into a liquidity facility it is which was the first step of it is why not engage the fund in this the fund could be the one to lend to this system well then if nothing is happening the money might still sit idle but it then sits idle in a it is compartment and to make it as a first step in the system I still think it's worth thinking it would need a lot of legal changes probably because I just also wondering could the fund be the one to help narrow the yields on certain European countries government debt I see that as a real challenge and probably I could easily say this is not within the mandate of the SRF and this is not in the mandate of the SRB and in the mandate of the fund no but I would still believe that moving from where we are with these scattered funds to moving to quality European FDIC model and to be fair we have moved a long way even five years ago I would only have talked about a European FDIC if I were closer to the door than all the others because I would have immediately been killed nowadays I think half our constituency is probably saying yes this is where we want to end in some form or shape for this the money within the single resolution fund could be one of the starting points to get the it is come get the DGS component to get an it is component working it's a long way and let's not be naive we are regulated by a law or a regulation but we also have an intergovernmental agreement and the like so to get all this up and running will need political will will need more steps to take but let me perhaps even as I have the chance built on what Sean said I think this idea and it was an incredible effort and huge will put in by Pascal Donahoe to come up with all the bits and pieces will prove helpful because it shows that this all needs to be addressed and the communication didn't say it will never ever come it just says we start with one step and the next to come and I'm firmly believing this is the only way you go forward because if you say I need to address everything at the same time and a bit in tandem for me normally translates at the end in it will be difficult and it might take long okay thank you very much I'm going to come one question has a more general point which actually touched on something Sean we talked about earlier which is Europe seems to make the biggest progress during and right after crisis will it need another crisis for Edis to happen Peter I go to you first on that one because you caught my eye it's not something that is especially a special rule for the financial sector I think Europe if you look in many political fields often moved forward when there is a crisis but it will be a crying shame if it only can move if there is a crisis well I think especially in times where that are not so tough we should all try to our very best to understand each other because that's what it's all about in Europe that one understands the others and its needs and its legitimate interests and from this starting point trying to find solutions that are more pragmatical and less let's say ideological as some of the positions had been here in the past represented from all sides I hope we move forward even if there's no further crisis in the next time Sean what's the easy or to get things done in the good old days after the crisis well they weren't very good old days to start with I mean I have to say it is true that we tend to make the bigger steps after crisis because as the commissioner said there's a sort of something that has to be done and then we get around the table and do it personally and I speak personally I've never found it a very efficient way to make progress because you have to receive quite a bit of damage before you make progress far better to make the progress before it's a little bit like closing the door after the horse has bolted so and the banking union is a good example I mean the we want the banking union because we want to restore the level of banking integration we had before the crisis so now we have the architecture we need the architecture we could have done with by the way to manage the integrated banking system before the crisis we might not have had the crisis frankly if we'd had the banking union architecture before the crisis but then we had the crisis and then we get the architecture and now we have to sort of use that to restore the damage that has been done so of course from an institutional point of view from a bureaucratic point of view it's very good to say that we need a crisis and then we jump forward but I think from an economist point of view not the most efficient way to make progress for an institutional basis and we should be able to in periods of calm work it out and move forward Alka, do you think we need a good crisis to get this going? I would fullheartedly embark to Sean's argument of course you fix your roof normally in good times and when you see that we are in very uncertain uncharted water for the moment I would rather like to have the roof fully fixed than just having a bit of plastic on and hope it will be sufficient but honestly I'm not so pessimistic we have now or the commission now has to come up and I know there's a lot of work already gone into this with this crisis management deposit insurance review and don't forget there's also the banking communication review so the state aid framework and this will get us fairly soon back to some of the more integral question on harm and on broadening the scope of banks that go into resolution if you broaden the scope of banks going into resolution then you need to know how you fund if need be and there the paper of the council is very clear it says it's Amral on the one hand so banks own fund to be billed up and it is the industry funded tools and for me industry funded tools first and foremost translates into DGSs and this means you need to talk about exiting the banks you need to harmonize the use of DGS not just as a pay box which might be not the most efficient way so purchase and assumption transaction or sale of portfolios and banks and for this you need to harmonize the question on what could be the upper limit to use those funds so there is a lot of steps which basically pave the way into it is okay I know we've taken a lot of questions well a few questions from the virtual audience have we any questions from the actual audience on the deposit guarantee scheme because we are going to be going to crisis management soonish so if you have a question now on the deposit guarantee scheme this would be a good time okay the actual audience is very shy so I'll come back to you got two more from the virtual audience and while the actual audience are trying to gather some courage for the next time I ask you from the virtual audience are uninsured depositors of consumers are uninsured depositors i.e. consumers and SMEs at risk with the current crisis management framework if they have depositors amounts at medium sized banks okay I guess I know we talked about an easier question I would say the simple answer is no we have a deposit insurance system and but the probably also honest answer is cover depositors are always safe if the DGS is not sufficient the national budget is the one to back the DGS there is a clear understanding of a number of whether you talk about SMEs whether you talk about non-cover depositors that you need to protect them in the interest of financial stability and now let's be realistic in most cases this should be possible will it be a walk in the park no will it in some cases overstretch the capabilities of the of the DGS yes I am more fearful that it might overstretch in some cases the belief of depositors in other banks that the member state will manage and this is I think again a plea for a more European system because we have seen it in the past well if you see some trouble here why should someone in another bank be so worried yes but they are because they believe the system might not be capable and I think there a European system is always a better basis okay thank you another one Alec which is probably going to be for you again although Sean you might want to chime in without an EGIS is liability and control truly truly aligned within the banking union so without having a European deposit insurance scheme is liability and control truly aligned within the banking union I can think of a one word answer I mean no surely not truly aligned not no no but I mean is it misaligned to the point where it's a fundamental sort of problem in the system no I mean what we have done with banking union is we have we have produced a framework in which we can make decisions collectively as a union so Andrea makes collective decisions through the SSM for supervisor single decisions I don't even use collective single decisions and Elka will make single decisions for resolution so these are the decisions that are taken now what is often argued is of course that the implications of those decisions are sometimes left at national level and there you can envisage some misalignment and incentives between decisions that are taken centrally and some of the costs that might be born nationally those misalignments can be managed now and they are managed now but they would be as I keep saying it's not that banking union is not working banking union works it would just work more efficiently and more effectively with the third pillar so those collective decisions can be managed and they are managed but they could be managed more easily more efficiently if we had a third pillar so this is the sort of my my commissioners line of the class being half full it is more than half full I think it is two thirds full but you know we prefer to have it full full full okay another question actually Sean which is well it's a it's addressed to the commission which I guess in this case is you in the case of spare bank this is an easy one actually well the first part is in the case of spare bank did the Austrian DGS have to pay out for the German branches of spare bank would the Austrian if the Austrian DGS had been too small would the German or sorry would the Austrian DGS be too small had the German have been too small had the German operation been slightly larger which is more probably an other question there are both for Elka I think well I think the answers very gallant of you Sean okay I think the answers separation of responsibility not sure it's unfair no to be fair the system is pretty clear that the Austrian spare bank or that Germany was a branch of Austrian spare bank and therefore the Austrian DGS was responsible for this and from what I understood was supported in administration by the German DGS to manage it so the cost in this case are for the Austrian system but also to be fair from the in this case and the Austrian DGS has long been repaid out of the proceeds how how the overall case of the Austrian spare bank worked and if that was a good case of like resolution working well do you think I think it was a very peculiar case for me a very good case and a very standard case of the resolution framework was the far larger case Banco Popular which was a bank that failed which was also a cross border active bank because it had a Portuguese subsidiary and where the sale of business worked smoothly if you were today to look into Spanish government bonds you would not be able to spot the time of the resolution of Banco Popular it was basically neither to be spotted there nor perhaps with one exception in any of the banks bonds or bank equity it was a very clear case spare bank was a bit a peculiar case because clearly the basic idea in this case was that if spare bank fails it will be for the Austrian parent to basically bear the losses and to resolve now you never plan for a bank that fails due to a lack of trust coming from a war scenario and looming sanctions so what we basically were faced was with liquidity crisis classic bank run which made it impossible for the parent to support the subsidiaries any further so that we ended in trying to take the best decision you can take at this point and I'm always saying the resolution plan was very helpful to have a starting point to know where you were but then you needed to react to the crisis and you needed to find the best solution at this point in time and not to say I had another idea for a totally different situation and were there any were there any learnings from that case that you'd like to incorporate into policy going forward or was it just so unusual that it never happened anyway so no I think the one learning of this or one simple fact is you do a resolution plan for a baseline scenario you try to prepare you try to understand the institution with your baseline resolution plan and the most likely scenario we always take is large losses make the bank non-viable we also think about liquidity runs but I think everyone in the room would have said if the team that's responsible for the bank comes up with a scenario and what in case of a war you would have said did you have a bad night can we please stick to realistic scenarios and a plan so the plan is a baseline but the plan is not something that gives you a straight jacket so you always need to stay very agile to be able to address the problem you have at hand and not to say have a solution for another problem yeah got it okay Peter we've got a question for you from the audience and it's a question I think that you're going to like and be able to answer easily to Peter is the cost of regulation affecting the bottom line for banks is the cost of regulation is the cost of regulation affecting banks profits for sure everything that costs affects profits but it's always a question what do I get for it and when banks have to pay to funds to create a stability in a financial system looking at the overall picture it helps also banks for sure the question is only how much if Elke asks us for 55 billion euros in her fund this is what is politically agreed this is something that makes sense at the moment it looks like at the end of the day she will have 80 instead of 55 which is much more than the original political agreement then it starts to getting worth discussing about it Elke have you gone after them for an extra 25 billion a billion and where's it going no I've not gone after 25 billion on top just for the sake of the SRB no to be fair and Peter knows it very well the 55 were projection by very reputable people at the point in 2012-13 to say this might be about 1% of covered deposit at the end of the period they were always a bit as a guidance they were not a politically agreed we stop at that number the agreement then was 1% of covered deposit and I've always said those that wrote the legislation gave our team a fairly interesting task you have to build up in even steps to an unknown number most people that had basic math classes know that this is a bit an unsolvable equation I think we've done very well in trying to adjust it stepwise and with depositors increasing till now now the situation might change in 2022-23 we might be closer to 80 than to the originally estimated 55 all right thank you very much Irina I've got a question for you from the audience a decade on and seven years into operations the SRB only has one woman on its board will parliament accept an all-male board when the current chair being female steps down I think that the parliament has been always very vocal about it and the commission knows very well and I think it's a collective effort that we have to make and the issue is not I mean for how I see it is not simply to have a woman at the top of which of course is always a good sign a good signal to give but the point is to have women involved in the process because the problem is that for many years when we received you know that the number of candidates for a top to be evaluated for a top position there were no women included in the process and so this is a battle that we as a parliament always fought and we've been fighting also in recent years and I think that we've seen improvements also if you see the appointments that have been made in the past couple of years in various European economic authorities and institutions ESMA YOPPA well I think we achieved good results but we started with the process totally and I totally appreciate that this is a journey and you can only and you can only appoint people from the available pool but very directly if we get to six months time Elka steps down will the parliament say that there must be at least one woman on the board or will you accept the normal male board? I think that we need we need to receive a pool of names that are gender balanced and then we will evaluate on the base of competence because that's what we do with a portable lens that's okay this selection is made on the base of competence as always is being the case and I as a woman I would never desire a woman at the top because she's a woman all the women we have appointed they were appointed because of their competence not because they were women but we want to have the possibility of evaluating women in the process and that's the demand that we ask the commission when or the other institutions when they have to send their names we want to be able to evaluate both men and women and see who's best suited for that post that's where we are inflexible I understand that but there's also an objects element to it I mean having a board which is entirely male surely isn't going to look good and there's also the element of balance where people argue that if you have a mixed gender board that's an advantage in itself so Elke if you were to hand over to an old male board would that disappoint you? I think there are some questions to which I don't take a position I would hope that we keep a balanced board and that we keep the most balanced board by talent and by capabilities and I would be probably disappointed if it's then an old male board but let's also be fair and this is more to everyone outside if women are not applying for positions it's difficult to have women so I would strongly encourage everyone for positions please apply it's worse the effort okay thank you Sean a factual question for you which is a bit close to home for us I think what happens if a DGS backed by to a DGS backed by an EU state if the EU state itself is on the brink of bankruptcy? Let's hope this doesn't happen This would be a rather trouble situation I mean I think if that the situation then the problem is much wider than the DGS okay so we're into bailouts again so we're into a much difference scenario but I mean there is no expectation that we will be in that scenario so let's be clear but they're aware of course risks during the last crisis this was one of the problems which was emerging when you're in a state which is in itself the state itself is on the verge of of bankruptcy of course it cannot underwrite all the things it needs to underwrite but you must remember we are working in the whole crisis management field we are working towards a situation where that won't arise where the need for the state to step in behind the national DGS and this is I give you what I was going to say earlier when you work on crisis management if you want to be faithful to the underlying principles of the BRD which is that you preserve financial stability but you protect taxpayers to the highest you do not want to have a situation where if the national DGS gets exhausts its funds that the national government must step in and that's where we're going to find that having EDS around would be very useful because EDS could play that role of providing liquidity that the state would normally provide so therefore having EDS in the frame will allow us to satisfy both principles both kind of objectives of this BRD fully preserve financial stability maximum protection for the taxpayer so I'm going to turn now to the crisis management framework I think we've got about half an hour left on the panel beyond the EDS that you talked a lot about Elka what are the other potential sticking points do you think you're in the crisis management framework what needs to be earned out well I think the first point is clearly and the commissioner mentioned it and Andrea also I think mentioned it that we have obviously an agreement that we need to ensure that a bank that's failing a mid-sized bank can exit the market we are living in a market economy so we're not living in a system where the failing ones get some safeguards around and then carry on so the main part is to ensure that a failing bank can exit the market without causing financial stability concern for this you can broaden peer you can use the resolution powers and as I said then you need to think about what are the financing mechanisms behind the second part is clearly something we've seen and I hope for some movement there we are living in a world where insolvency systems are national and I've made the joke I thought the Austrians should be similar to the German one I assure you we speak the same language but the systems are different so we have 21 or even more systems and I would hope that we see some narrowing down of unnecessary hurdles within the national systems there I'm not expecting that we that we harmonize insolvency systems at all I'm expecting that we harmonize the most metering parts in this area we need to address once more also the topic of a single banking market which means where are we on liquidity waivers I'm looking at Andrea I think he's not happy with where we are and the like could also be a topic not sure whether it really fits into this framework and those already would be good steps forward but let's also be realistic to your previous question I think we should never forget how much better the system is already equipped risk reduction got a bit out of our view now we have achieved quite a lot have made the system by far more resilient so we are talking now when we talk about the crisis redness about a backbone to the system but not about something that has to jump into action tomorrow hopefully thank you so Peter I'd like to bring you in here as well in terms of the crisis management framework what are the key sticking points for your constituents and I guess possibly there's different ones given that you span such a large range but maybe give us two or three of them so first of all we would like to see here an evolution and not a revolution we hope that Elka sentence the resolution is for not for the many it's for the few not for the many is kept alive and will also in a modified framework be the leading rule and we would hope to see here more proportionality in all regulation that we have in so this means looking at the size the complexity of business models in all things from the resolution planning but this is something in general that we would ask for if we could manage this then I think we meet better the needs of all the actors on the financial markets okay thank you Irina I'd like to bring you in as well what do you think are the key are going to be the key sticking points around the crisis mechanisms well you mean in parliament in parliament in parliament because we I still can't you know tell much about because we haven't opened the debate yet so we have to still see the proposal so but of course this is the topic that we have been discussing over time so the what I can foresee as an issue and one thing that I have to say that that is I want to make it clear the fact that we have isolated crisis management and leaving the ides which is supposed to be the most controversial doesn't mean it will be easier honestly I don't think I'm sorry I am myself an optimistic person but I need to be realistic as well and the crisis management has its own challenges and and one is what Jean just mentioned the fact that it's closely linked for example to ides as well because then it would be difficult to to have that kind of intervention without addressing the issue of the funding and without addressing the issue of a common safe net and so these I think it will be the biggest issue and the biggest challenge that may you know make it difficult to get in agreement not to mention the risk I hope I'm wrong that we end up undoing some of the progress we've made to the extent to which if we go back to a more renationalized way of addressing the crisis we narrow the scope of the SRB and for me that would be something to avoid but it's a risk because if there is no you know exactly with no it is no possibility of having a European safe net that that's the risk that when you're going to review the crisis manager you end up renationalizing or we pushing everything on the national DGS so I think this this could be another issue but I mean it's early I don't want to be too pessimistic we will put all the effort in trying to make it work but it is indeed a challenge so so Sean how optimistic are you about crisis management getting through fine oh I'm very optimistic I'm even more paid to be optimistic than other people but no I am very optimistic I think I mean we're all experts around here but this all boils down to pretty much what Elka said you know we want to have a framework that allows banks of all sizes and all business models to be managed in a crisis in a way that reconciles these two fundamental objectives of the BRD you preserve financial stability and you protect the taxpayer that can be done but as we've seen in the cases so far it has created a lot of stresses in the system it doesn't need to be as stressful as it has been now it's an old story you know we used to know how to handle banks that were too big to fail governments used to bail them out and now we've moved to a system where you know creditors bail in and governments no longer bail them out so we know how to handle the big banks and we know how to handle the very small banks they go into judicial liquidation and they're taken out the same old problem arises what do you do with those banks in the middle the ones that are too big to be managed to judicial legislation or judicial proceedings but not big enough to fit into the framework as we have it now so what we want to do is to extend that framework to capture those banks in a way that allows them to exit safely from the market preserving stability and not costing taxpayer and that means we have to go back into the system and look at certain changes we would have to make around the use of resolution so that relates to not just we always speak about the public interest assessment but also the early intervention part has to be discussed as well because we have issues there so I put those together if we're going to extend resolution to these mid-sized banks which may not have internal funding it may not have bail-in-able funding available we have to think about what external funding available so there you know we have national DGSs are they able are they most efficiently able to intervene in some cases yes in some cases they're able to intervene in many ways in other countries they can only pay out the question arises is this the most efficient way to organize DGS so you must look at how you organize your DGS to optimize your funding possibilities and then to do that you're going to have to look at how DGS is treated in the insolvency framework so it's which brings us back so as Irina said nothing easy there but at least the issues are clear we know what the issues are they're fairly they're technical issues at one level they have a lot of politics stringing out of them as well but the issues are clear and when you think about the medium-sized banks to what extent are those fiscal issues complicated by the ownership of them in certain countries no I don't think no that's really not the issue the issue is really where you draw the line between the medium-sized and the small-sized that's the more important issue where they're located I think is less important or who owns it or who owns it if they're owned by the German counter what really is important is how you draw that line and how you work out those banks and that will be a decision ultimately for probably for Elka to do we'll have to draw that line and say well this one I can take into resolution and this one I will send to national but Elka will need to be will need to feel secure that when she sends it to the national level that the national level can handle it I think that's probably one of the topics we had to learn that we need to really have a clear understanding of what the national DGS is then are capable and allowed to do because otherwise you might end a bit in this situation well the national authority should take action and says atomistic liquidation will be a disaster and at the same time you don't have really an answer how to deal with a mid-sized bank so I think there's a lot of work to just clarify and then to build the necessary funds be it in-house or be it as part of a framework to deal with what we I think all call under alternative measures so if you talk about purchase and assumption well if the DGS then says but then I'm off the hook because I'm only there for payout it doesn't fly we've got another audience question and Sean this isn't going to go to you because it's going back into the crisis previous one and speaking about crisis management do you think precautionary recapitalization worked well in the last decade especially under its temporary aspect I maybe explain the temporary aspect for well well well the precautionary recapitalization is essentially a temporary concept it's given to you as a precaution and then it's supposed to be given back when the temporary disturbance has passed has it worked well but it has worked that's for sure I mean we have used it and it did prevent problems who do we use it for we use it from Montipas okay they haven't paid it back I was going to say are we calling that a success but you know as I as I always had this discussion with with Elka we never define what temporary is so I mean temporary comes to to an end when it's right to come to an end but I think it's another area where I think if we get the crisis management framework right we get the early intervention part right we get all of the other parts right precautionary capitalization also work better because it was one of the instruments we were having to use in these stressful situations where as I said the crisis framework wasn't optimized and it's still not optimized but I think if we can get it into a better shape all those things around precautionary capitalization will become much easier to use and will be used I think for let's say more standard purposes Elka are you a fan of precautionary recaps? I would say within this entire when work as I mentioned earlier we need to look into the crisis management framework we also need to look into the banking communication which is DG Combs her own rules around stay date to align them here we have still work to do and I would stay consistent to say and we need to have aligned incentives so far neither the bail in rules are the same nor do we have a fully aligned log logic there so this needs to come I would leave an instrument like precautionary recapitalization in but with a clear understanding what temporary means temporary is not eternal but is it three years is it five years so you would effectively have a maximum cap on us yes I would I would think we I'm not even sure whether I would put a maximum cap on it in writing but I would have a clear understanding what temporary means it was designed like top yeah for bang to restore confidence not to be used but to basically then then after we being withdrawn and I think there is still room to go but I agree also with Sean it has to be part of the overall framework okay onto a more general topic and this is going to come to all of you at some point quite a lot we're talking here about the test of time and it has been a decade give or take since banking union was first envisaged a lot has changed in the world since then so how do you think about whether banking union is fit for the financial landscape now and like are we arguably fighting the old war and actually we should be spending more time thinking about crypto or thinking about shadow banking rather than still dealing with this same from 10 years ago Sean is there an opportunity cost in terms of how much time is this in a banking union versus the new finance out there I don't think I mean I think today you know the Europe remains pretty heavily bank dependent if I'm honest despite my own best efforts to push crack capital markets union and to push the digital agenda I don't think they are necessarily necessarily going to make the banking union somehow relevant in in the short term or even the medium term so I think the agenda we set ourselves in 2014 to not only have you know to have an architecture which will allow us to have a properly supervised adequately managed in crisis banking sector and an integrated banking sector is the same today as it was 10 years ago yes there are changes yes there are things on the horizon we have digital we have crypto we have other things actually digital and crypto and different things for banks to be honest they present different channel challenges but I think this does not in any way reduce the sort of the validity of the banking union argument is taught but is there an argument for maybe updating us not particularly in I mean not as we have laid it out I mean you always have to be aware that the world is changing and we change bank regulation all the time but the construction of banking union the architecture we put in place and we want to put in place I think remains valid today Elka do you think banking union is still fighting the right problems I think banking union as a concept is spot on I would not see this changing where you need to be mindful is that you keep an open eye where you might see you have always focused on this and this problem well a problem might be a different one so keep an open eye on what if a bank is failing due to something that 15 years ago you wouldn't have considered a problem like a cyber risk attack but the basic concept to have within a very integrated market one banking supervisor one resolution authority and a safety net which is the same for all of us is there what I find where we need to make progress but we haven't missed we haven't missed the boat we have not we're not fighting an old war is that capital market union needs to come in place because still it's helping the banks also to have a strong European capital market and but no I think overall banking union is as relevant today as it was when we invented it Peter do you agree it's as relevant today as it was when they invented us maybe you didn't think it was ever that relevant but how relevant it would have been to be already in place we saw in the crisis and it will remain relevant for all times the question is how much we have to work on it and as I said before evolution not revolution so to make things better to sharpen things to create perhaps more predictability or transparency in the one or the other thing these are the things we have to to solve and work on and I think it's not not a contradiction to work on both to deal on the one hand with all these questions coming up with digital currencies crypto all these things on the one hand and on the other hand not to forget to adjust the regulation for the banking union always to the needs of the time because Raina when you think about the overall priorities in the political landscape the next crisis we talked earlier about how a crisis can really gather a lot of momentum and focus the next crisis looks more likely to be in the digital slash crypto area than in the banking area so is that going to mean a lot of the focus the gravitates towards Mika rather than really the kind of political support that that they need for banking union I think we need both I mean I don't think they are incompatible we are working on both things we are you know in the negotiations on Mika Christine Lagarde came to us in in our monetary dialogue the other day and she was already talking about Mika too because she said we need to do more not a fan, Sean I'm just you know put it into you on your table so on and and so that's definitely a stream of work that we've started you know honestly I think of course it's a big thing for us to be able to close the Mika negotiations you know we have a trial next week and hopefully so but I think it's the beginning of course I don't think it will be ended there you know I think we will need to monitor this so when everything that entails the cyber security we did the Dora the digital operational resilience we have this continuous you know dialogue with the ECB on the digital euro so of course this is something we have to monitor we have to be ready you know but that doesn't mean we can do without a strong and resilient and really truly European banking system I don't think we are there yet I don't think the two things are you know substituted one for the other and so I really think that we need to to push because having a strong and resilient banking system actually will help financial stability also in the face of emerging digital risks if we have that kind of banking system that is more resilient more profitable more integrated and also capable of innovating because let's face it some of the innovation that is coming up like mushrooms unregulated is also because the banking system failed the innovation challenge and didn't see some opportunities that are others seen so I think this it's our job to to help the banking system to become more resilient more profitable truly European thank you so Sean there is certainly a feedback loop there in terms of what happens say in the digital landscape and the banking landscape and the financial stability world do you see any potential for the crypto crisis to get so big that it actually triggers a crisis in the banks that would then give you the capital to kind of get banking union moving faster if it becomes a financial stability issue for banks I hope not I don't think so I mean because there is you know there are some linkages there no there are our linkages I think we we may have been in a sense lucky that this correction and we're not sure it's yet it's a correction now happens now because we have begun to become a little bit more concerned about crypto and that space in two dimensions one it has been getting bigger of course and growing quite rapidly not yet at a sort of systemic level on its own but still growing quite rapidly the secondary we worry about is of course interconnections between this new part of the financial system and what we call the traditional part of the financial system and the banks not so much so far so I think if people are hoping for a crisis coming that route to build a banking union I don't want it and I don't think it's a risk at the moment but I think again not a good idea to start looking around for useful risks to build a banking union now fair enough Irina we've got another question for you from the audience the digital audience the questioner says the euro group didn't agree on a work plan to complete banking union should the european parliament now take up the mantle and attempt to agree a work plan I mean we can try but unless there is an agreement at the level of the of the member states you know we do have we still have the edis proposal in the drawer you know it's there and and I don't know maybe we can try to resume it and I have tried to talk to the reporters from time to time and see but if we don't see the political will you know to really push it I think the parliament alone it's we have co-legislators there is this co at the beginning that but but maybe maybe you're right maybe we should try to to try to to push and force a little bit more and see if it works but we have tried on many other accounts and and then ended up you know stranded on the beach but we'll see we'll see Sean for you I hadn't thought of this but in order to complete banking union do we need to prevent member states from being shareholders of banks like happens in Portugal, France, Belgium Germany or Italy no no does anyone want to ban state ownership of banks for banking union to go ahead I don't see it really as as really a relevant issue frankly okay that's a quick answer for that oh I think we have two or three more the digital audience is very active yes yes definitely I have tried many times after this one question we come to the physical audience where we have got hands thank you um this is for I think either Elka or Sean probably what would what could be the destiny of a bank failing its failing from a precautionary recapitalization is PONV a new restructuring plan a liquidation I think the legal framework there is pretty easy if the bank fails its commitment within a precautionary capitalization this would turn it from a commission point of view into illicit stay date and this in turn makes the bank failing unlikely to fail now this is the legal text so I think there's nothing to add unless Sean has a different interpretation I'm just also conscious of people's coffee break we will take the questions from the audience in the room with questions I didn't see a hand there from the other front if you could please if you'd like to identify yourself and your question that would be great yeah seems great okay great hi uh Catherine Carlson I cover financial services for Emlex my question is for Mr. Berrigan commission and beginners and her speech earlier was talking about the upcoming legislative proposals on crisis management I'm wondering if you can shed any light on what we might be able to expect from these well I think I've probably covered a lot of the ground that that they will cover as I said I think what we want to try to do is to solve this problem we've had and we thought we might have solved with this framework that is how to handle those mid-sized banks that do not fit well with the resolution framework but are also difficult to manage at national level using simple judicial proceedings so we will have to I think if you read the eurogroup statement you'll see there are four or five areas where they suggest we should work we agree that we should work in those areas that's probably not a big surprise since we're sitting around the table of the eurogroup so we will work in the area of extending resolution we will work in the area of funding we will work in the area of organization of DGS and lease cost tests and where DGS is fit into the insolvency proceedings but as Irene rightly pointed out these are technical on one level but they have political implications as well so this will be this will be an interesting discussion thank you and we have another question from the audience the lady back here I think might ask one hey it's Jodie I'm part of their capital solutions group at Natwiss markets Elk I think you mentioned before that there's one first step to mutualising which is harmonising what are your views on the possible implementation of full depositor preference across Europe so like we have in Italy and Portugal and Greece and do you see that happening anytime soon I'm not sure that I got the question fully here might be my ears Depositor preference I think is a topic which is part of what will be within your proposal because if you talk about funding well then you talk about a DGS to be part of the funding now you need to have some what call it even a cap called least cost test and if you look into historic experience in depositor systems being exposed then it was mostly a pre-funding of covered depositors because out of the proceeds in the end the DGS was repaid from the proceeds of an insolvency so in a nutshell in a world of where you forget about interest the least cost is zero this is not very helpful if you want to fund something Thank you for the question in Europe where full depositor preference were to exist would you see minimum emerald subordination requirements being reduced potentially? The very simple answer is that the fabulous 8% to access the fund are part of an intergovernmental agreement so this needs all member states to agree to something else so not for us I would say in my words always all banks need to have a sound layer of capital slash emerald and then you might talk about different solutions I'm not a firm believer that I say I need to be very firm on the big boys I have an insolvency for the very small and the ones in between need to have somehow a free lunch so they also need emerald they also need to be resolvable in my words but let's wait for the proposal but clearly with the old with the current super priority of DGS's you will not get much funding contribution from a DGS so you need to think about what is the right point I would say depositor preference is a good starting point okay thank you very much my personal view I hope that has answered the question unfortunately we are just a bit at a time and I'm conscious that people's need for caffeine and also of everyone telling me to wrap up so thank you so much to my panel you've been excellent that was a very fast hour and 15 minutes so thank you so much for everyone thanks very much to our virtual audience who was great with all of your questions and to those of you in the room as well thank you indeed thank you very much to Laura and all of our panelists and also to those of you online for providing such great questions led to a great discussion we'll now take a short break we'll come back together at 1635 sharp so please we'll see you then at 1635 for those of you in the room we'd like to invite you for a coffee outside thank you hello and welcome back everyone the team of this event necessarily takes a bit of a look back at what the banking union has achieved and where it might have fallen short our next panel however jumps ahead to the future to take a look at banking in 20 years time what that might look like and what that might mean for all of us let me hand over now to our moderator journalist Jennifer Baker who will introduce our panel thank you very much indeed it is a delight to be here as you said for this panel we are looking to the future which means we are looking ahead at banking 2040 so there are no wrong answers which is wonderful for my panelists as experienced as they are so I'm very pleased to introduce next to me Patricia Boydons who is the Innovation Consultant and Vice President at FinTech Belgium and the FinTech Ladies Ambassador here in Brussels David Martin is a Consulting Strategy and Regulation Partner at Deloitte in Spain and finally we have Marilyn Piccaro who is Director of Innovation Conduct and Consumer Department at the EBA thank you all very much for being with us now we want this panel to be quite lively you're going to look into your crystal balls and tell us what you see for the future and what might be coming down the road and hopefully a little bit of what you would like to see coming down the road and we want the audience of course to ask questions using the app using their online tools and here in the room but we're going to kick this off but I'm going to ask you all for your elevator pitch your three-minute this is what I think is going to happen and why Patricia I'm going to start with you yeah thanks thanks a lot Jennifer yeah what's my elevator pitch three minutes then I would say the absolutely trend I see is open finance and open finance meaning open data and of course data control because we had now the data X in February this year and of course the aim is said to make more data available because data availability is utter most important for the financial services industry because all these new technologies like AI and you have machine learning and all the connected devices so with this data they can generate of course new financial products and services but it's only possible when data is of course accessible so open finance I know is also within the EU digital finance strategy so I know it's one of the pillars so that's what I'm explicitly referring to this here and now because you know we had already PSD two so there is already the reinforced data portability but that only reflects excuse me the the the current accounts at transactional data but what I'm referring to is also make this data available of all financial products in services so not only the current accounts but of course add also savings accounts investment accounts but financial services doesn't stop with banking it also goes beyond so I'm also aiming towards pension schemes towards insurance policies so with this open finance people can take of course control over their own financial situation and have of course this holistic view on their financial situation because with open data and with all those new technologies of course technology like AI you can run the algorithm in order to see if your investment portfolio is still in balance with your own risk profile for instance or maybe you are over insured or maybe worse under insured so open data new technologies and that's the way to go forward so I would say PSD two then comes PSD three no not even open banking one no we need open finance one that's what I mean and with the data with the new technologies then we can build a whole new and better of course financial product and services more tailor made that be a more transparent cheaper of course and of course widely accessible and available because financial inclusion education by giving those insights in those new dashboard or other products that will be possible so that's a bit my elevator pitch thanks thank you British I'm sure we will talk about some of those issues as well as we go through our discussion David what's your vision of the future hello I want to thank the SRB and the ECB first for inviting Deloitte to the conference I think it's very you know it's an honor to be in this first joint conference that marks the 10th anniversary of the University of the Banking Union so grateful to be here we were discussing the previous panel the 10 first years of the Banking Union and then we're looking at the next 20 years I think banks are prone to change they've been here with us for centuries I think not many companies can say that so one should you know assume that they will be changing with circumstances, society, technology, data and everything that comes and that's what we're going to talk about I think the last you know we look at the last 10 years and a lot has changed now we have bigger banks we have less banks we have a it was saying before an architecture and ecosystem we didn't have before we didn't have the SRB we didn't have a resolution authority or a joint supervision so if we look at project what the industry will be in 20 years who knows really it's very difficult I think we can kind of infer from the challenges that banks are facing now what could be the future and I think the banks are facing a number of important challenges like becoming the center of the relationship with the customers I think they're as important as they are they're not at the center as other competitors are at the moment so keeping the role is essential data will play a very important part in that achieving sustainability objectives I mean they've been by the regulator they've been put in a position where they have to be contribute to the ESG policies of the European Union and that they're a very important agent in that change emerging technologies technologies we'll talk about that a lot in this panel I think that's a banks have traditionally invested a lot in technologies but the speed of change is becoming incredible at a time where they've been low negative interest rates and low margins small profitability so that kind of makes it more difficult to cope with the big boys in technology talent management I think when I was younger working for a bank was a very good option I don't think nowadays is what the kids have in mind when they finish school or university there are other startups and there are other places where they want to go so banks have a challenging keeping talent increased competition for new players not so much existing players or peers but new players like it's particularly in payments we see with open finance where we're going to see animals we haven't seen before of course big tech and other things and of course new business models that have emerged as a result of a regulation but not only and in terms of the trends I think I would agree obviously data I will call it there will be two main drivers the data economy so everything about data who controls the data I think banks are in a very good position they have the trust they have a lot of transactional information from clients so it's not that they're not at the data center but then they need to be more so if they want to be at the center of the relationship with the client and then of course the digital economy I think digital economy is very important in terms of the we've talked about blockchain we talk about crypto we talk about internet the new internet artificial intelligence so those two trends will I think will pave the way for the next 20 years well thank you and Marilyn your elevated pitch we're calling it but your opening thoughts on what you see in your crystal ball yes thank you thank you for giving the world and I'm honored to be here and then share my thoughts so I would list four or five key things that I have in mind for the next 20 years perspective first of all it is likely that we are reconsidering what is our customer centric service model or customer centric approach to the financial services overall and what I mean by that is a customer most likely in the future is not the one who is chasing chasing the bank or chasing any service provider it should be seamless for him or her all the needs the customer has are kind of predicted and managed by the financial institutions without direct orders from the customer and I will elaborate later what this potentially could mean and then what are that considerations here secondly my thinking is around financial services for everyone unfortunately I still see that we are largely fragmented based on some years old data by the world bank still indicated that across the european union we still have 30 million adult citizens without access to the regulated banking services most recent numbers most probably are on the way so I'm just wondering you know what those 30 million adults then are doing and they are actually excluded then from other opportunities they would have either in the job market or social benefits and we are actually increasing the poverty inequality and etc so basically banking for everyone despite your geographical location gender income level whether you are in the big city or rural area going forward here thirdly now if looking more to the financial institutions side most processes are are automated or automatic so obviously servicing all the customers in the world or all the customers in the european union financial institutions must think about their unit cost and there is hardly room for the manual works and that also applies now to the other side controls monitoring and also policy development and the supervisor activities as it's often I use the term invisible controls or invisible compliance how we ensure that we actually meet all the requirements that we are not even able to catch up with but in a way that it doesn't require manual work so that's one topic to discuss bit later and lastly I would touch the the obviously the awareness so those young citizens who are today in the kindergarten are the ones who are making difference in 2040 so what we are teaching them now and whether we are teaching the right things for them for the future yes I would stop here well I wasn't expecting any easy answers but I think we've got a lot to dig into there I think Patricia let's start with it sounded to me that a lot of you were thinking in terms of evolution rather than some sort of crisis driven revolution but I think we also had ideas of innovation and that sort of innovation needs to be driven by something and I'm curious what do you see as sort of the main challenges or the main drivers to sort of innovation in the fintech sector and is there anything that regulators or policymakers could be doing to foster an innovation friendly environment that also still protects consumers yeah yeah yeah I think the word has already fallen in the the other panel during the last debate and of course one of the biggest trends of innovation that we see right now has everything to do with decentralized finance and WIP Web 3.0 and so of course my let's say my speech was all about open data of course those technologies said distributed ledger technology needs data otherwise it can't work and also David already briefly touched it upon the Web.3 it's all about digital economy but also the ownership economy and so it will be of course Rome wasn't built in the day and evolution also comes in waves but in 20 years time for sure decentralized finance will change the way how we look at money now it's it will be completely other setting decentralized meaning that now financial institutions and it supports or the Xcode that takes a strategic a strategic decision decentralized finance you will have maybe one now taken as a community they will take the decision based on their rules and their procedures and there will be no one individual who can break the blockchain that's that's not what this technology is built yes so I think that will be the game changer but of course regulation also must follow we have Mika luckily because I know a lot of fintechs a lot of fintechs also involved in blockchain projects in digital assets in cryptocurrencies they were really they are demanding this regulation because it needs to be transparent there needs to be customer protection of course they are they are really asking for this kind of legislations and it will be the same for other decentralized finance products and services and we need regulation because also we need standardization as you know now we have more than what was it 18 thousand different kind of crypto currencies and of course not all of them are going to survive so but we need the regulatory framework also for the standardization it was all only recent in the press that Meta has made has joined kind of a metaverse forum with several other important players like Microsoft like Alibaba and now they are trying to build one central light one standard for standardizing the metaverse so means for me regulation standardization and that's the way forward with this new web three-point yeah well i'm going to build on what you've just said because i want to bring Marilyn in from the regulatory side and ask what sort of regulatory rules what sort of supervision do we need to see with this sort of innovation that we're talking about and in fact i see here a question in from our audience already asking about whether there's a concern between the lag between the old people as they put it making legislation and the young people developing banking and finance technology and you know some old people make innovative things as well so how can the EU regulate if they're not even aware of the tech it's a challenge marlin i presume yes i i have a honourable role to be a director for the innovation department at eba so we are the ones who should understand and write guidelines so covering the innovation i don't consider myself too old yet um and i can confirm that most of my team members i haven't asked their age but it seems to be not old yet and they're not retiring anytime soon so rather young enthusiastic team but there are few obvious challenges obviously obviously so that regulation is always about the past i mean majority is about the past this is at least how the practice large least because it's very hard to regulate something that potentially comes in the future i'm not saying that it's impossible so this is one idea for me to figure it out how we could regulate the future that is not here yet but i guess it's the first step here is not to be late it would be already a accomplishment if me with the team and then the other colleagues would would come out out timely with the short guidance some explanations even training events and therefore having this dialogue open dialogue with the market participants and building the the way to the future together i do have private sector background in that sense that i largely i think i know what i'm doing also from from the banking perspective but the truth is that obviously world is changing fast so and there is not a single person who could be always up to date the most recent developments and that's the beauty of the game so we need to do it together and having this dialogue and then frequent interaction not to be afraid of each other because eventually we are actually on the same side so David i wanted to ask you about the impact of these imaginary at this point new technologies that might have on your business and also the challenges around the protection of data and again this is the audience is beating me too at every time there's another question here asking why should i share such sense of data with an unknown and maybe not properly supervised company there is a need for trust isn't there absolutely i think one of i mentioned the two drivers that i see is data and the digital economy and data is certainly at the core of of the present and the future i think right we have an ambitious agenda in Europe in terms of opening data which wasn't the case a few years ago and that is in process we have i would say the digital market act the DA and the open finance we have before the PSD2 now PSD3 so we have a number of pieces of legislation that are in the business of opening of opening the data across industries and not only not only in the financial industry but also across industry and that's going to generate a new economy that's what called the data the data economy that has benefit opportunities brings opportunities but also has challenges for the for the industry right in terms of the opportunities the additional data that the banking industry doesn't have and hopefully we'll get through all the this new framework will allow them to be more efficient in terms of operation will allow them to design better products for the clients because they will know their clients better than they do already would allow them to assess risk in a better way with more information not just the information that they have on their on their records so it has you know a potential in our most benefits for for the for the players in the banking industry but also it comes with challenges the challenges are that as it happened with I think in the last 10 years we've seen a lot of you know concentration in the traditional banks but we've seen a lot of new things happening in the payment area and I think PSD2 is is is partially responsible for that has you know has brought new that bring I said again new animals in the room that were not there I think open finance will bring even more animals in the room we don't we don't we don't we don't we cannot think of now new business models so I think is it's a great opportunity for banks but it's a great opportunity for new players that have not been born yet and will be born as a result of open finance so I think open open data will bring more competition for banks I would say banks are in a good position they have a lot of data already maybe not so much as the big tech for instance although those those business play those business that have placed themselves at the center of the data at the generate data so but maybe the banks have to change that I think that they're not they're not too bad position to do that and and lastly I think the challenges are in managing that data so there is the issue of intellectual property and the protection of businesses so there should be some protection there for it's not a free lunch where information will flow anywhere so that that information needs to be duly protected and also GDPR and also personal data as well has to be so it's there's a balance between opening up the economy creating a new economy which is going to benefit everyone public public authorities banks other companies customers and at the same time protecting data that is sensitive and and trust and trust is the definition of of a bank so I think they're you know if they play the cards right I think they they have very good credit themselves to to be at the center of this new economy Marilyn I want I want to create an image for the future so as a citizen if we could have a digital wallet where all our data is literally placed and obviously I'm owner of my own data and I can pick what type of data with whom I want to share and I also may choose to withdraw that and the question of trust is it's really up to me to decide whether I trust the small player some innovative startup or I'm more traditional I want to have a company with all traditions with a long legacy partnering with me but the question is you know what I get as a return because I give my data whether I experienced then super user friendly environment where all the transactions and all my financial affairs would be managed behalf of me maybe I would be interested but I may be also more conservative side and say that I don't actually want to share my data I want to do my own transactions I want to make my own decisions I don't need any predictive models algorithms etc so I guess the the picture for the future is really for the citizen to decide where how and when we are sharing our data and based on that obviously different things could be built on thank you well Patricia to build as well on what Marlon is saying a lot of these sort of services that we're talking about sound like they're going in the direction of democratizing finance and providing access to those 30 million or so people as you said maybe or not connected they all build on the backs of other things such as access to online services access to the internet and an educative knowledge to understand how to use it how do we build all of that into our societies with the idea of keeping the trust there yeah I think of course trust is extremely important and like Marilyn said as a as a consumer you must of course give your consent and you have full control on to whom and you will you will give that that data of course when then when then I look at tomorrow we will have this of course hopefully widely spread new technology that it's called blockchain and it is also this distributed ledger because it's controlled by a community and you can't break you can't change anything that will also provide those trust I never say technology always needs to serve a purpose or the business problem or a customer's issue or whatever you mustn't do blockchain for hey I'm a bank and I'm doing a blockchain project and that's that's not the aim not to have a sustainable future but technologies like blockchain can also help to build that trust and build it within society and have a decentralized financial system and I'm also very curious how that will relate that to our hopefully very strong European banking union well I see here an audience question that in fact Marilyn answered and I've only just noticed it if data is the new gold what will you pay me as a consumer I think perhaps it's in terms like ease of use choice and flexibility I think is probably the answers that you were summarizing there another question that we've got coming in that's getting a lot of thumbs up is could you talk about the compatibility of digitalization with ESG developments Patricia perhaps you could touch on that yes that's a very very important topic an issue of course we all read it in the newspaper that of course the bitcoin is kind of the worst electronic crypto money that there is absolutely that's true it's consuming too much energy mining bitcoin miners are also in let's say some exotic locations where there is no real sustainable green economy that is already present there they even reopen I've read old carbon electricity I think providers so that's not a good thing but hey bitcoin already exists for several years in this like I said innovation it comes in waves and it evolves all the time so now we also have other blockchain technology like like ether with Illyrium and you have the famous app proof of work and the proof of work to add up on the blockchain that's what demands so much electricity and computing power of course and now we evolve also to to the proof of stake what's less form more less electricity consuming so of course we are evolving and I also think that if I may speak if for the for the for the fintech community and a startup community I think all those people are taking ESG very very seriously and also I know even also fintechs who are even also specialized in ESG reporting in making all the requirements also more clearly transparent also for an investor if you want to invest upon it so yes there is a lot of criticism and a lot of things can be improved but we are aware I think the community is fully aware of of of ESG and I think it's a bit now with the real economy there is a target and everybody is moving and trying to reach the target well of course it's not just crypto mining it's all this data that we're talking about has to be stored and processed somewhere which is energy intensive but on the flip side you may find that actually being able to offer a more sustainable product is a is a selling point to the next generation who are concerned let's look at one of the other issues that cryptocurrencies have they're sometimes seen with the undertones of criminality David and you know there's sometimes reputational issues there let's talk about bad actors in general and the problems that we may see in sort of weeding those out what do you see as being the future in 2040 what will that look like? I think I was thinking that the crypto or blockchain started about the same time as the banking union but we did quite a different quite a different career where we are today it's not a very good moment to talk about crypto right now I think my experience is that obviously it's been a story of success and a lot of the actors in the banking community are looking with attention because well it looks very appealing the clients are asking for to get some part of the action as well so they feel the pressure but I think they're also very concerned that they're in a different position that those guys that are you know at the helm of the of the of the crypto industry so very very I think that the whole industry is expecting the first regulation in Europe Mika I don't know if it's going to be Mika too we just you know we'll be happy if we have Mika one for the time being and I think that's you know we'll see what happens with is very early on in terms of the where the technology is so I think I think the technology has to evolve in the same way that internet has taken 20 years to where we are today so it's difficult to predict whether this technology with the energy consumption and stuff is going to stay here forever it has a very good attributes the very nature of crypto is is a challenge for banks the centralized so the role of of a bank is to centralize between two sides and this is the centralized could be a challenge but I think when people think about crypto they just think about or blockchain they think about crypto but I think there are other uses that are super interesting for the industry like in areas like trade finance or smart contracts or complex transaction where there is where there is mistrust between the parties I think it will it will add it will make a lot of sense to use that technology and for the industry to embrace it in certain areas we'll see what happens with profits in those areas but I see I see crypto as a sort of blockchain as an emerging technology together with with the new version of internet 3.0 and artificial intelligence and other technologies so I'm sure banks will will embrace it and I hope that after we have a proper regulation they will enter into that digital economy and with them the clients and in a safe environment yeah yes Helen yeah so I may compliment a bit being myself close to 20 years chasing criminals in different roles so and I would just point out it's it's it's not about the particular mean how funds are transferred really being a young professional we we saw huge amount of falsified bank notes later just paper documents forged and it obviously this criminal kind of life and criminal way of of living and and acting this is also developing among other things so I would say that it's not directly related to the crypto or non non crypto so this is just another way of and transacting there could be analog to the crypto or even the fourth way of transacting in the future and whatever is is the mean we always should think about the risks and the basic principles we need to introduce so and that's the challenge with innovation that what is this one page maybe short overview of key principles we all should be aware of and follow even if we don't really know what is this innovation or new product solution is about and that's the regulatory challenge obviously so that's how to be proactive enough relevant enough timely enough for the market participants so using the professional judgment sometimes cut feeling how things could go wrong etc so I'm happy obviously to spend hours on criminal minds and the investigations but most probably this is not the topic for the banking 2040 well I did want to ask you on that I mean you mentioned gut feeling AI doesn't have any guts but is there a potential for using some of these machine learning or AI or predictive algorithms to combat money laundering or fraud I may obviously take the topic that yes artificial intelligence and then obviously it's one of the kind of elements machine learning which is more understandable way or understandable way of of applying technology in a way it has cut feeling because it's a supervised application of artificial intelligence which is kind of rule based and then it's learning based on historical patterns and then the information that is given but unsupervised artificial intelligence kind of learns itself you know you don't really know how and when and based on what and and in that sense that particularly the money money laundering terrorist financing private corruption fraud investigation area any technology that would support analyzing huge amount of data and suggesting maybe red flags items to follow up is very helpful and I do know that there is already practices out there which are supporting investigation compliance teams to do their tasks well David you've worked on resolution the same sort of question to you do you see an area where new technologies or or or you know new services might actually be able to help in the area of resolution certainly in what is called the management information system so kind of like the I think I think like supervision or resolution without information are very are you know just not possible you will be doing your job based on imperfect or past information so I think the fact that the new technology will allow you to have real-time access to the whatever you're supervising should make the job easier so I think yes of course I think banking resolution or supervision should all should evolve with the industry that they supervise so if the industry is moving in in in that direction this will also move in that direction otherwise there will be a disconnection between between both at this point I want to see if we've got any questions in the room just if you can raise your hand if there's a question you will want to ask yes any others so I get a sense okay do so we'll start over here in the center please thank you it would be a rather question to Patricia now one remark and one question you mentioned we will have a lot of data maybe it's my professional damage but a lot of data is not necessarily good I mean the data reliable the quality of the data it's something different than just a lot of data right and that's why my question you mentioned when we have a lot of data speaking about the blockchain and the data is there and not changeable when we think about the bailing for example so you do have to do some changes to the data and here is my question what chances and risks do you see coming from the open finance and blockchain for example because we do have to foresee all the risks and try to mitigate them thank you yeah of course that's a good one because yeah of course I'm also not a fortune teller but like I said we need the data to have this innovation going and also we need the regulation because we need a standardization of course in my perception data standardization is also enhancing data quality make it exchangeable between all parties and of course keep the data secure here in Europe we have of course the GDPR data the privacy the personal data that's a very very important one of course if you look at the US you all know the big tech and the discussions and that that they already have been yeah but I think it's important for the protection it needs to remain in confident hands and there comes the trust again I think the blockchain technology will will for sure enhance the trust indeed there is a small small issue when it becomes on privacy because GDPR says you have I have the right to be forgotten yeah I just like I just said the blockchain never will forget once it's stored in the blockchain you can't simply erase it but I think that's just a small issue and for sure we will have a work around or work this out or make that it will work but we need to protect also the EU because if if you look ever it was also said the EU is looking maybe for digital stablecoin it was also in the press recently that circle now is launching a Euro backed stablecoin in the States where of course our legislation don't apply and they are keeping Euro backed reserves in premises of course in the United States with their financial institutions the blockchain the internet there are no boundaries so therefore we must also protect here our to have a strong digital economy but a European also economy because we know to whom we are competing we are competing with States we are of course competing with Asia and as the internet and certainly with 3.0 if it has no boundaries yeah we must secure our own financial stability stability not only of course for the banks but also for the future for decentralized finance for the lectures thank you for the question I would love to talk about GDPR GDPR for days but we will take our second question over here please thanks a lot it was a lot in line with the previous question on on indeed that quality and that sources and how far are we from really having good data because we still see a lot of concerns in terms of data quality also we see standardization is still not there so will taxonomies help what do you see happening there because when we try to pull that together we need to make sure that we are talking about the same things and how do you see this evolving and how far are we so is it something for the next two, five years, 10 years or is it only for 20 40 years you are talking about 20 40 banking thank you Patricia I think that's probably directed at you again if you can give a short answer I know you don't know what's going to happen in 20 40 no no no I sure I don't know but I do know that we need this legal framework because that will help with the standardization if there isn't an illegal framework like we see and we see Meta and Microsoft already teaming up to create their own standardization that of course also will help but we need to standardize also we have that many cryptocurrencies for sure there will be there will be currencies that will be completely obsolete along with some maybe let's say some digital economies but there will be the next wave and there will be then a bigger community with better data with where there is for instance this interoperability so that you can go from one metaverse to another but maybe to give you an already a clue on the speed of innovation recently Gardner stated that in 2025 we will spend each one hour in a metaverse universe or with web 3.0 so that's not that's very near future so imagine what in 20 years the financial landscape will look like well I've just a couple of questions online that are very linked asking is there enough interaction between developers and regulators in this dialogue as someone else has pointed out EBA, ECB, SRB, DGFISMA, National Central Banks, National Finance Departments who do new technologists and developers interact with? What advice do you have for them David? Well how to interact? Yeah and who to interact with? I think yeah I think that when we see in in my organization we've seen the profiles of people working their changing very quickly I mean we have more engineers engineers data scientists and people like that that are especially in the areas that we're talking if we think that the future is in data economy or the digital economy you certainly need more of those people rather than lawyers or economists and as I say before possibly supervisors should be doing the same thing and kind of like enrich their human capital with people that are able to understand that language and are kind of like not too distant from what is happening right otherwise it could happen like with the crypto you know that there's a big big market happening and then the regulation hasn't arrived yet so so I think we should try to ideally by engaging in a dialogue limit the time between what's going on in the market and the regulation and supervision that comes after? Well I think we're almost at the end of time but since we're looking at the future and looking into crystal balls and dealing in magic if I have my magic wand to wave and grant each of you a whiz for whatever you want in the banking regulation in the EU by 2040 what would it be Patricia? Yeah like I said it must be open finance and then if we have that that technology can do his job whether it's AI or a machine learning or blockchain or whatever of course let's say new new business model new economies that will that will help and maybe just I want to touch one one point because I do have also comments from the FinTech community with supervisors I think it's very important that that the learning training and of course understanding and building trust it all relates also to the the team maybe also of the day too much I hear it that it's purely a one one way conversation and you need you need to be compliant you need to comply but there are also other possibilities like for instance maybe the UK is a good example there you also have the regulatory sandboxes which are not here present in in Belgium and I hear it's more like a two-way conversation trying to understand each other and they also try to think along of course within the regulatory framework but you need to understand each other and I think it will also be not a bad idea maybe also to engage some more technical skills people who know the technology and what to do with it because for most of the people it's like a black box it's not transparent but that's not what the Fintech community wants we want also to be that's okay okay okay okay my magic wand got lost David what would you like as your wish I think if looking into the future I think maybe maybe I was looking banking union I take it on maybe in the future it would be financial service financial services union because the way we see it is it looks already a bit old I mean maybe when it was we have insurance we have asset management we have banking but I think things have changed a lot we have new players we have smaller players we have payments I think as I said before there's a lot of things happening in the payment space and we will have more of those especially going forward so I think banks had a you know dominant position in the past I think it was a decision made here in Brussels that they shouldn't it shouldn't be like that in the future maybe we can have a you know a more comprehensive view of regulation and supervision with the bodies talking to each other more there are so many people doing things for the industry that is difficult to cope I have a you know unified comprehensive view that is positive for the industry that is positive for the for the for the customers and that will be my I know it's difficult but I will be my wish and Marilyn yes so the question for me obviously is not what I would expect from the regulation but how I plan to execute or how we write guidelines in the future and here I would I do have a dream and then one one of those dreams is that if there is any entrepreneurs listening or people with innovative ideas so it's obviously very welcome that you implement your idea you understand that there is a market there are scale but then it would be very very helpful if you have let's say a one-page description what type of guidance or regulatory challenges you are facing with your innovative idea and also that you would come and present your challenges so we would actually understand that we will have a dialogue as we are connected with all the stakeholders so for us it's not the challenge to sit on the same table with the ECB or SRB or national competent authorities we're all there but what we are time to time missing is really understanding what is the developments in the market side and what type of challenge you are facing so where you need this guidance I'm glad you think along well thank you all very much I actually don't have a magic wand so I won't be granting you wishes and we don't know 2040 is still quite a long time away and I'd like to remind everyone when I finish a paddle when we're looking to the future when we're talking about innovation that we just don't know Edison didn't invent the light bulb by trying to make a more effective candle so anything could happen all bets are off but thank you very much for your attention for your questions and a big round of applause to our panelists thank you thank you so much Jennifer and the whole panel for really interesting discussion we'll be slightly frightening at times but I think a positive outlook overall ladies and gentlemen unfortunately this brings the first day of our joint event to a close thank you again to all of our moderators and speakers today and in particular to the audience both in the room and online for your fantastic questions we start again tomorrow morning at 9 30 with a keynote speech from KBC CEO Johan Thais and a panel discussion on operational resilience in European banks you really don't want to miss either of those so please tune in tomorrow but for now goodbye from all of us here in Brussels thank you