Therefore more private financial risk sharing can significantly improve the macroeconomic stabilisation of the euro area and thereby the functioning of EMU.3 However, bear in mind that in recessionary periods, the power of this risk sharing mechanism is significantly reduced, in particular via the powerful credit channel. Let me point out that this channel accounts for about one-quarter in the United States and around 12% in the euro area, of the overall income smoothing that is achieved in both jurisdictions in normal times.4 Perhaps even more important, financial integration is also essential to foster economic growth. Integrated capital markets provide a wider source of financing and lower funding costs for households and firms and ultimately support innovation and the efficient allocation of capital. A financial system which allocates resources efficiently and is resilient to shocks ultimately supports the transmission of monetary policy and its effect on price stability. The banking union and the CMU affect different parts of the financial system at different stages of development, but follow similar objectives to achieve a more efficient and stable financial system. They are also complementary projects: work on them should run in parallel and require a solid monetary union. Completing banking union The first task ahead is to complete the banking union. Each of its three pillars, notably the Single Supervisory Mechanism (SSM), the Single Resolution Mechanism (SRM) and the planned European Deposit Insurance Scheme (EDIS) address the risk of fragmentation.

Notwithstanding all the efforts, challenges remain ahead and we will continue to address them with an aim to increase the stability and resilience of the banking system, as the key pillar of the financial system and thus contribute to stronger, but sustainable financial support of the real sector. In this light we will proceed with strengthening the supervision on systematically important banks, enhancing our macro – prudential capacity, modernizing the organizational and analytical infrastructure for crisis preparedness and resolution, contributing toward further development of alternative financial instruments, innovative financing, deepening of financial markets, and encouraging non-disruptive entrance of fintech services. Last but not least, let us not forget that investors’ decisions are information and data based. A strong portfolio of high – quality data, in line with the data international standards, is a prerequisite for investors to make their first steps in making due diligence and decide on the comparative advantage of the country. Our adherence to the highest IMF SDDS Plus standard this year, made us part of a small pool of 18 countries globally, assuring for the quality of our data and contributing to the health of the overall business environment. Of course, there are many gaps on the structural front that should be addressed, to allow for faster growth and convergence. I am more than confident that with strong commitment of all stakeholders involved, in conjunction with accelerated EU accession process, we will achieve our milestones, contributing to the wellbeing of the overall society. Thank you. 2/2  BIS central bankers' speeches