Now it includes 38 of 91 eligible funds inspected by the Bank of Russia. Many funds had to improve the quality of their assets to enter the system. Furthermore, actuarial industry has been launched in compliance with the law; today we have a bit more than 100 actuaries. They are active and it is an important segment of the financial market established last year. We have almost stamped out unscrupulous depositories which provided bogus excerpts on available securities. We implemented our function of a megaregulator which allowed us to make cross-checks and reveal such situations immediately. We took measures under the project “Clean Register”. BIS central bankers’ speeches  3  We have developed and are implementing the road map on electronic communication in the financial market. Electronic communication decreases companies’ costs and ultimately the price of services for consumers, provides adequate financial inclusion to avoid having dependence on actual branches. New digital technologies quickly transform the financial sector. We have established a special technology and innovation task force at the Bank of Russia which is to study technological trends in the field of finance, and to timely reveal the areas requiring regulatory and supervisory changes. We seek to avoid hampering the development of new, more efficient and userfriendly technological solutions, but prevent accumulation of risks capable of mitigating consumer right protection. Last year we established a Centre for Cyber-attack Monitoring and Response in the Financial Sector (FinCERT), which provides, among other things, methodological assistance in ensuring the highest possible cyber-protection to market participants.

Considering these figures, it is clear that Europe has the resources to face a manageable financing gap in some parts of the region. And yet, it is in turmoil. The answer to this paradox can be found by considering the true nature of the crisis. Most observers would simply see the fiscal imbalances in peripheral economies. These may have been the trigger. But we are now looking at a true financial crisis – that is a broad-based disruption in financial markets. To understand what is going on, it is necessary to take a step back. Europe is the most financially integrated area in the world. There is full capital mobility inside the EU. Financial regulation is almost totally harmonized, financial infrastructures and payment systems are closely interconnected. Europe is truly a single financial market and, more importantly, a truly single financial system. The single capital market has brought significant benefits to Europe. Capital has been flowing to peripheral countries, triggering investment and growth. Financial integration has supported and underpinned the broader process of trade and economic convergence. At the same time, capital mobility has been used to postpone fiscal adjustment. Capital inflows have fueled credit and asset booms. Current account deficits have been financed through fragile sources of funding. The easy access to financing has created insensitivity to current account imbalances which, in turn, have weakened the incentives for preserving or improving competitiveness. An integrated financial system may be efficient, but not necessarily robust.