Mr. Pat Casey:

I might just add to that. The purpose here is the overall framework, which involves a prevention phase and a preparatory phase. The individual institutions and the resolution authorities will be required to draw up recovery and resolution plans. They will have to do that at the level of the institution. That will identify the various risks and how those risks are to be addressed. There are a number of early warning lights which should arise if the system is properly structured, supervised and enacted at the levels of the institution and of the supervisor and the resolution authority. There is also the ability to intervene. The resolution authority, in consultation with the supervisory authorities, can take a number of actions to intervene in a bank which looks as though it is beginning to enter into difficulties. They can be of a fairly active nature and can include the appointment of a special manager. It is only if the institution is failing, or is likely to fail, that one is into more stronger powers of interaction. What one should have with this framework in place is an architecture which allows interventions to take place.

As Mr. Carrigan and colleagues in the Central Bank of Ireland have said, it is not just on this pillar that the overall safeguards rest. Stronger capital requirements will be put in place between 2014 and 2020 when the full effect of the capital requirements directive is in place. Ongoing stress testing is taking place and is being overseen by the EBA. That will also be monitored. There are more robust powers in the Central Bank of Ireland, which have been put in place through legislative processes, and there is better and more recruitment and more active engagement with the individual institutions. Taken together, one has an overall framework which should allow more effective monitoring of risks. The issue is how those risks are addressed by the different actors at the level of the institution and that of the supervisory authorities in the bank and elsewhere.