Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I will address the fragmentation risk first. The European banking system is rather fragmented at present. I have just remarked on the different price of money in the different jurisdictions as represented by ten-year bond prices, for example, and that shows the level of fragmentation. We are trying to create a banking union with one set of supervision rules, resolution rules and deposit guarantee rules such that we remove the fragmentation. The process will be towards a unitary banking system rather like the United States. There will still be some variation depending on the cost bases of the banks. Of course people will price in risk when they are dealing with banks and the banks will price in risk when they are dealing with customers, but that is normal banking. I am suggesting that as it develops, as the European authorities insist that banks are absolutely adequately capitalised and as they carry out stress tests to measure the level of capitalisation - they will carry out stress tests again next year universally throughout Europe - the fragmentation will be taken out and, therefore, one of the primary purposes of the banking union will be achieved.