While the regulatory and legal barriers have proved to be thorny issues, I expect that the Commission, as part of its capital markets union (CMU) action plan, will not be dissuaded from its efforts.2  Integration of securities issuance With T2S, the Eurosystem has created the basis for an efficient and effective settlement 1/3  BIS central bankers' speeches  mechanism for securities in Europe. At the same time, by adopting the CSD Regulation (CSDR), the Commission has contributed to further harmonisation of the CSDs’ regulatory framework. However, to be able to reap the benefits of these efforts, market participants and corporates need to have full and direct access to the entire EU securities market at a low and harmonised cost. A European securities market should offer the possibility of issuing, settling and holding securities in the same way, regardless of where issuers and investors are located. A fully harmonised system of securities issuance could reduce the transaction costs for capital financing, make the European securities market more attractive in the global economy, and allow an effective redistribution of private risk across the EU markets. A sound and uniform panEuropean securities issuance mechanism would also be conducive to the creation of the CMU. Despite efforts to overcome the fragmentation of the securities market by providing a level playing field, there is still too little evidence of competition. The effects of competition have not been felt in terms of an actual geographical widening of services provided by the vast majority of issuers.

First, a number of studies show that short-term Treasury bills (which are a publicly provided type of money-like asset) enjoy a “liquidity premium,” especially when the supply of Treasury bills is relatively low.9 Short-term Treasury bills can provide various money-like services for larger institutions because they are so safe. Deposit insurance is limited (currently it is limited to deposits of $ so large institutions that want to hold funds safely for short periods cannot find that safety directly with bank deposits. Instead, shortterm Treasury bills can provide a convenient way for large institutions to hold wealth in a safe form. Because the Treasury bills are short-term, their prices don’t experience much variation, and they are easily transferred and used as collateral. Hence, they provide those features of money I mentioned earlier, namely a good store of value and a means of exchange. A second finding from these studies is that when the U.S. Treasury issues relatively smaller amounts of Treasury bills, the private-sector issuance of money-like assets increases, taking advantage of the liquidity premium that large institutions are willing to pay for their safety and convenience. So when the government funds itself with relatively more long-term debt, firms fill the resulting gap by issuing more short-term debt.10 In related work, Jeremy Stein (2012) points out that, notwithstanding their private benefits, there are systemic risks involved when the private sector creates money-like assets. For many reasons, if private intermediaries run into difficulty issuing those assets or in rolling over their short-term debt, then they must deleverage abruptly.