Recent research looking at the pre-crisis period suggests that where banks face limited competition in their domestic markets, and firms are more dependent on them, financing constraints for SMEs have been higher.3] Matching credit supply and demand We are already seeing signs in the euro area that a rebalancing towards capital market financing is taking place: as bank credit to corporates has fallen, it has been approximately matched by issuance of corporate bonds. It would nonetheless be naïve to expect this transition towards a new financing mix to occur seamlessly. While on aggregate, euro area credit supply might be sufficient to meet credit demand, I see two factors that might lead to an imperfect match between supply and demand for certain firms. They are the location of those firms and their size. 1  See for example Arcand, Jean-Louis, Enrico Berkes, and Ugo Panizza (2012). “Too much finance?” IMF Working Paper No. 12/161, or Manganelli, Simone, and Alex Popov (2013). “Financial dependence, global growth opportunities, and growth revisited.” Economics Letters, 120(1), 123–125. 2  OECD (2014). “The role of the financial sector for economic growth in OECD and G20 countries,” internal paper prepared for the Economic Policy Committee. 3  Ryan, R., O’Toole, C. and McCann, F. (2014), “Does bank market power affect SME financing constraints”, Journal of Banking and Finance, January. BIS central bankers’ speeches  3  Location In terms of location, the cost of and access to finance in the euro area remains strongly based on national conditions.

Five major trends are having a significant bearing on the future development of the global sukuk market. Firstly, the bond market is now becoming key to meeting the funding requirements for both the public and private sectors in emerging market economies. This is particularly the case for the Middle East and Asia, which are among the fastest growing regions in the global economy. This includes financial needs of the private sector following the privatisation and implementation of infrastructure projects. The development of the Islamic Bond Market, the Sukuk Market will provide opportunities for the corporate sector, the government agencies, multinational corporations and multinational development institutions to raise funds through the issuance of sukuk to meet their financing requirements. The sukuk market also serves as an important platform, complementing the conventional bond market, in enhancing the effectiveness and efficiency for the mobilisation and allocation of funds within the domestic financial system, as well as in the international financial system. Secondly, while there has been growing interest in the issuance of sukuks by corporations, sovereigns and multinational corporations, the demand for sukuks significantly exceeds the supply. Today, the global sukuk market, denominated in international currencies, is estimated to exceed USD50 billion. Although the size of the market is modest by global standards, the sukuk market is experiencing remarkable growth, increasing at an average rate of growth of forty per cent per annum. The significant demand for sukuks have been spurred by the high levels of surplus savings and reserves in Asia and in the Middle East.