- makers could be tempted to take a protective stance and ring - fence their financial systems. but that would hamper the efficient allocation of resources in the global economy, or in other words, that would be bad for growth and jobs. the financial stability board and the other financial standard - setting bodies, such as the committee on payments and market infrastructures which i chaired last week in mexico, play an important role in keeping everyone together and ensuring that the new financial regulations are implemented consistently. financial protectionism is a temptation that we all have to resist. bis central bankers ’ speeches do you think that developments in the financial sector have made the world a riskier place? the financial sector is much more secure than in 2008 because the regulatory and supervisory environments have been much strengthened. the banks are smaller, their conduct has improved and they are better capitalised. the financial system ’ s resilience to shocks is much better now than in 2008. but there is no room for complacency. digital banking and digital finance have the potential to change market structures very rapidly. there is also room for better oversight of non - bank players ( “ shadow banking ” ) and better incentives for bank senior managers. the regulatory community has to address these changes. but in general i think that we are at a more secure juncture than before the crisis, especially because the banking industry is more regulated and better supervised. and in the euro area, by taking responsibility for banking supervision exactly one year ago, the ecb has certainly contributed to this. the surplus liquidity is not getting to the market and is reflected in the prevailing deflationary conditions. where is this liquidity staying? the most important question for me is : how can the economy create better long - term investment opportunities, so that liquidity goes to the right place? this is the question on which policy - makers should focus their attention. central banks can provide liquidity and improve financing conditions, but at the end it is the responsibility of elected governments to make their economies more business - friendly so that profitable projects can materialise. what did the ecb learn from the greek episode? greece is unique and but the greek experience offers useful lessons on the functioning of our monetary union : until 2010 in greece, wrong decisions were taken in the public sector and macroeconomic imbalances were allowed to build up. the lessons for the future are that euro area countries should understand that their decisions will also impact on their neighbours, and that they have to enforce policies

support the modest economic recovery and ensure debt sustainability, while remaining in full compliance with the eu ’ s fiscal rules. with bond yields subject to volatility, high - debt countries in particular need to pay attention to risks related to a reversal of the current low interest rate environment. we have achieved significant progress over the past year, with banking union becoming a reality and with the single supervisory mechanism and the single resolution mechanism starting their operations. however, developments in greece in the first half of this year served as a reminder that the euro area architecture remains unfinished. as spelled out in the five presidents ’ report, a more complete union is necessary to make our monetary union in europe stable and prosperous. the economic and monetary union will notably need to strengthen its tools for managing and preventing the build - up of fiscal, financial and other macroeconomic risks. it is also necessary for the euro area to move towards completing banking union in order to create a truly single banking system and achieve its objectives of breaking the banksovereign nexus, making the financial system more resilient, and protecting the interests of taxpayers. in parallel, the authorities will need to decisively deal with remaining crisis legacies to create a better foundation for bank lending to the real economy. to further widen the scope for cross - border private risk - sharing in europe, the eu will have to make progress in developing a capital markets union ( cmu ). cmu will also play a key role in supporting european growth by diversifying sources of funding and increasing companies ’ access to financing. a long - term vision accompanied by an ambitious agenda for further action will be necessary in order to achieve the ultimate aims of cmu. a more complete union in europe will not only create a more prosperous and resilient euro area economy for its own citizens, but will also be in the best interests of the global economy. bis central bankers ’ speeches