1 Introductory remarks European legislative initiatives Jerzy Pruski Bank Guarantee Fund Poland EFDI - IADI Conference Strengthening Financial Stability – Deposit Insurance Contributions Rome, 1 October 2010

European Union Risk areas 2

Risk sources - main areas 3 Limiting risk requires actions in three areas: 1)domestic markets 2)cross-border issues 3)large financial institutions Broad range of benefits of globalisation Insufficient information Crisis contagion Global economy

Harmonization and common EU financial stability rules 4 Basel III Assets transfer „Living wills” DGS Directive Resolution funds European initiatives Domestic markets Cross-border issues Large financial institutions Area not addressed Cooperation EU institutions, e.g.: ECB - European Central Bank ESRB - European Systemic Risk Board EBA - European Banking Authority

European Union Large banks perspective 5

Banking sector size and concentration 6 Differentiations - banking sector asset size - proportion of potential risk to banking sector asset size - proportion of potential risk to GDP in different states Sources: ECB, Banks Annual Reports (2009), „Credit Writedowns” (June 2010), „The Forbes Global 2000” ranking (2010)

Banking sector size and concentration in relation to country fiscal position 7 Sources: ECB, Banks Annual Reports (2009), „Credit Writedowns” (June 2010), „The Forbes Global 2000” ranking (2010)

Banking sector size and concentration in relation to country fiscal position 8 Sources: ECB, Banks Annual Reports (2009), „Credit Writedowns” (June 2010), „The Forbes Global 2000” ranking (2010)

Main challenge Conclusion 9 Existing regulations and undertaken initiatives Domestic markets Cross-border issues Large financial institutions Problems partially addressed Additional activities required Area not addressed Problem particular serious in Europe Problematic fiscal position and extremely limited scope for intervention in a distressed bank by individual country Monetisation public debt : - can not be applied by individual country - unclear mandate for ECB - European Financial Stability Facility Vast asymmetry between actual benefits from Large Financial Institutions and potential cost of resolution Interventions in LFI carries the risk of sovereign debt default