Regarding private placements, market-led initiatives have already allowed the effective development of European common standards. The French financial industry has been particularly active in this field, with the development of a Charter for Euro Private Placement for France in 2014. This Charter has been re-used by the International Capital Market Association (ICMA) to elaborate a market guide on common market standards and best  BIS central bankers’ speeches  1  practices. These initiatives could leverage on a common European definition and classification of SMEs to develop a Pan-European Private Placements market. (ii) Second, market-based financing should be seen as a complement to, not as a substitute for, bank-based financing. It is essential to foster the development of market-based financing as a complement to bankbased financing. Although this process has already started, the speed and extent of the shift differ across countries and sectors. Even though a rebalancing of the European economy financing mix is a desirable outcome as it diversifies the available sources of funding, banks will still have a major role to play. Some segments of the economy, namely SMEs and infrastructures, heavily rely on bankfinancing, due to the existence of high fixed costs and significant information asymmetries. Banks are indeed better equipped to assess the credit-worthiness of such counterparties or projects. Having said that, clear and transparent information on credit risk is a prerequisite to the recourse to any source of funding, be it intermediated or not.

Even though the analysis of the cumulative impact and the interactions between regulations is still in its early days, vigilance is required to ensure that the implementation of reforms does not result in a reduction of financial activities, such as market making that are vital for preserving market liquidity, financing investments and firms and ultimately the real economy. The foreseen banking structures reform and European Financial Transactions Tax (EFTT) are cases in point. In both projects, an appropriate approach should strike the right balance between limiting risks associated with trading activities and the need to preserve financial activities that are useful if not essential to the development of the real economy. Doing so would be fully compliant with the overarching objectives of the Capital Markets Union. 2  BIS central bankers’ speeches  Having better integrated markets within the European Union (EU) would also mean the emergence of more reciprocity issues as regards macroprudential policies. At the macro level, authorities should then closely review the potential additional vulnerabilities and risks attached to the CMU both at the domestic level and on a cross-border basis. Authorities will also have to strengthen their analytical framework and possibly complement their macroprudential instruments which are mainly bank-based at the current juncture. I will conclude with some remarks regarding longer term work, namely how to harmonize further domestic legal regimes and the institutional architecture. The Commission’s green paper has identified some areas for longer term work, including the need for further harmonization of insolvency regimes, securities laws and tax regimes.