These questions go to the heart of the current work by the two international standard-setting bodies most directly involved, the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO), as well as by the Basel Committee for Banking Supervision (BCBS) and the Financial Stability Board (FSB). Today I will cover some of the issues authorities are tackling. The global regulatory agenda implemented since the crisis has made CCPs considerably safer. As a result of the G20’s commitment to introduce clearing obligations, CCPs have become “super-systemically important”, and ensuring their safety is thus critical. Over the past few years, the global regulators (CPMI-IOSCO, FSB and BCBS) have offered guidance in many areas to increase the resilience of CCPs and their participants. Let me give you four examples: First, rigorous risk-management standards via the Principles for financial market infrastructures: the PFMI were adopted by CPMI-IOSCO in 2012, implementing ambitious standards covering every aspect of a CCP’s risk management framework. These Principles are significantly tougher than those they replace and their consistent implementation across jurisdictions is currently being monitored.2  1  I wish to thank Pierre Marmara for contributing to this speech. I remain solely responsible for the views expressed here. 2  See CPMI-IOSCO, Implementation monitoring of PFMIs – Level 1 assessment, August 2013; CPMI-IOSCO, First update to Level 1 assessment report, May 2014; CPMI-IOSCO, Implementation monitoring of the PFMIs: Level 2 assessment report for central counterparties and trade repositories (European Union, Japan, United States), February 2015.

Such very powerful and perverse feedback loops have been at work during critical phases of the crisis, over the last two years. The purpose of the banking union, decided on in June, is to break that link and create, as a first stage, a single supervisory mechanism in the euro area under the auspices of the ECB. It is essential that the banking union be rapidly implemented, covering all credit institutions. It will restore confidence in the banking system. It will re-establish the normal functioning of monetary policy. It will de-segment financial markets and allow for normal private capital flows within the euro area. It will ultimately allow for a disengagement of the euro system from interbank and financial intermediation. Moving decisively towards a Banking Union is one major contributing factor in reducing uncertainty and boosting confidence. Conclusion: the ability of monetary policy to fight uncertainty Uncertainty is a major cause of the current weak recovery. One may point to the paradox in the present environment characterised by very low interest rates, very large cash reserves in the hands of corporates, but very little investment. The good news is that a small spark could have huge effects. The bad news is that this spark has not occurred. Monetary policy cannot by itself remove economic uncertainty. It can contribute to limiting and attenuating its effects. It is also essential that other sources of uncertainty be dealt with, especially when they stem from government policies.