18 At the macro level, there is now a strong body of evidence, looking across a large range of countries and over long periods of time, that high levels of trust and co-operation are associated with higher economic growth. 19 Put differently, a lack of trust jeopardises one of finance’s key societal functions – higher growth. Those social capital effects appear to be particularly potent when it comes to financial decisions. Evidence suggests that a lack of trust leads people to retreat from the stock market and banks and to move towards cash holdings and informal sources of credit, such as payday lenders and loan sharks. 20 That jeopardises the second key benefit of finance to society – improved risk-sharing by households and companies. So a lack of trust in finance potentially hobbles both economic growth and financial stability. That lack of trust is the mirror-image of the perception gap between the financial sector and wider society, the Great Divide. The Great Divide matters because it signals a pronounced  13  2016 Edelman Trust Barometer. For more information, see http://www.edelman.com/insights/intellectualproperty/2016-edelman-trust-barometer/global-results/. 14  2016 Edelman Trust Barometer. For more information, see http://www.slideshare.net/EdelmanInsights/2016edelman-trust-barometer-financial-services-results. 15  For more details, see Ipsos-MORI Veracity Index 2015. 16  For more details, see Chartered Institute for Securities & Investment (CISI) news release ‘Bankers pessimistic about culture change…’ (February, 2016). 17  Financial Ombudsmen Service. For more ombudsman.org.uk/publications/complaints-data.html. 18  For example, Bloom et al (2012), Guiso et al (2015).

Unicredit Group can probably be qualified as the quintessential European cross-border banking group, with operations in 22 European countries and, amongst these 22, in 19 Central and Eastern European countries. Alessandro is also the President of the European Banking Association. The last 2 to 3 years have been especially eventful for financial integration and stability, with once in a life-time developments. After Lehman Brothers filed for bankruptcy in September 2008, the global financial system experienced unprecedented stress and policy makers had to tread unknown territory in dealing with it. BIS Review 47/2010  1  The financial crisis has raised a host of policy issues that will provide food for reflection for generations to come. I will mention a few of them to set the scene and to kick-start the discussion. The first set of issues relate to the developments in the late nineties and early 2000s. The combination of high economic growth, ample liquidity, increasing financial integration and development, and “light handed” regulation sewed the seeds of the crisis to come. I believe that a number of people and organisations, including mine, identified vulnerabilities in the financial system before the crisis erupted. Nevertheless, we did not anticipate the timing and the intensity. We should ask ourselves what we missed in the run-up to the crisis and what the lessons are for the future. Once the crisis erupted in full force, a first casualty were the money markets, which provide the oil to make the banking system run smoothly. Money markets came to an unprecedented stand-still.