on new instruments for regulating loans for the construction or purchase of residential real estate ” by the german financial stability committee. bis central bankers ’ speeches specific limits on exposures to shadow banks should be considered and the scope of sectoral risk weights ( currently available for real estate and intra financial sector exposures ) could be extended to other exposure classes, so that macroprudential authorities can address risks emerging in specific sectors in a targeted manner. furthermore, a time - varying dimension for both the leverage ratio ( lr ) and the net stable funding ratio ( nsfr ) – that will become part of the toolkit as soon as introduced – could be considered. finally, it is necessary to simplify the current cumbersome notification and approval procedures in order to allow macroprudential authorities to act in a flexible and timely manner. another issue relates to the need to expand our macroprudential toolkit beyond the banking sector to also cover risks among non - banks and the financial markets as a whole. in recent years, financial activity and the financing of the economy has been increasingly shifting to financial institutions beyond banks. for example, the investment fund sector has been growing strongly, both because of surging inflows and rising asset prices. as of the first quarter of this year, investment funds in the euro area are providing €1. 3 trillion in credit to financial firms, €1 trillion to governments, and more than €300 billion to non - financial firms in the euro area. they also invested in equities and other non - financial assets, including real estate, both within the euro area and outside. the non - euro area assets make up about 40 % of investment funds balance sheets. in short, investment funds have an increasingly important role in funding the euro area domestic economy and for channelling investments abroad. i see great benefits in broadening the funding base of the european economy, where marketbased financing complements the traditional banking system. market - based financing can be seen as a spare - tire which helps satisfy demands for financing of the real economy, especially in times of sizeable deleveraging pressures in the banking sector. moreover, by spreading financial risk outside the banking sector and on a larger number of market participants, such development may also be seen as reinforcing the overall resilience of the financial sector. the capital markets union initiative in the eu will help promote these valuable functions of market - based financing. however, such a process also entails a transfer

interest rate risk. the low interest rate environment has led some countries to recommend caps on bank deposit rates or caps on guaranteed benefit schemes of insurance contracts. these are important to safeguard the resilience of the financial sector. the national bank in belgium also expects that pay - outs to bank and insurance shareholders are limited when deemed necessary to enhance their solvency position and to sustain their long - term resilience. these examples show that macroprudential considerations lead to policy decisions through a broad range of instruments and with varying legal powers ranging from moral suasion over recommendations to provisions with clear sanctions. it is of course too early to fully assess these experiences. macroprudential policy in the euro area is still in its infancy and we need to fully understand the effects and the interactions among the different instruments. substantial analytical and empirical work is needed to place the macroprudential authorities into a position to use the available instruments in the most effective way. at the same time, it is fair to say that macroprudential policies are already contributing to creating a safer financial environment in the euro area. going forward, macroprudential policy can represent a key building block for high and sustainable economic growth in the euro area. in order to reap all benefits of an effective macroprudential policy, however, the macroprudential policy framework needs to be completed. completing the macroprudential toolkit there are at least two important directions to follow to complete the macroprudential toolkit. first, we need to further enhance the european authorities ’ ability to intervene in a timely and efficient manner with macroprudential action. this entails, first of all, to strengthen the coordination role of central authorities to ensure full consistency and to account for possible spillover effects of macroprudential policies. it also requires expanding the toolkit at the eu level. some instruments that are available for national macroprudential authorities are not present in the crr / crd iv and are thus not part of the ecb macroprudential toolkit. they are primarily borrower - based measures, such as caps on ltv, lti or dsti, which have however proven to be rather effective, and should be included as in the revised crr / crdiv. for details on the implemented measures see press release by the central bank of ireland, 27 january 2015 “ central bank announces new regulations on residential mortgage lending ”. see “ recommendation of 30 june 2015