. 4 other securities borrowing markets, however, show the more established behaviour of cheapening around the same period. this divergence may be being caused by increased focus on sufficient high - quality collateral holdings ( linked to the lcr ) on part of some banks rather than the usual focus on cash funding. the concurrent tightening of bank leverage rules may also have restricted the ability of banks to engage in collateral transformation, further exacerbating temporary collateral demand and supply imbalances in specific cases. importantly, the eurosystem is helping to alleviate these collateral shortages by making all securities purchased under the pspp available for securities lending, both by national central banks and by the ecb. 5 but what is the longer term solution to the side - effects of regulation? in the policy discussion, the focus is now turning from designing the next piece of regulation to assessing the compounded impact of what has been done and implemented so far. in my view there is scope to fine - tune and streamline the regulatory landscape to iron out some of these unintended consequences. but even if costs are identified, that would not justify rolling back the core tenets of what has been achieved. i can only agree with new york fed president bill dudley that “ even if higher capital and new liquidity requirements were found to result in greater transaction costs, these costs would need to be assessed against the benefits of having a more robust and resilient financial system and a reduced risk of financial crises in the future. ” 6 remember that in the run up to the financial crisis, there was an illusion that liquidity could be provided for free to issuers and investors. such liquidity was a mirage 7 created by distorted risk assessments and hidden cross - subsidisation across capital market activities. so even if we now legislate to prevent the risks we know, we will not abolish the risks we don ’ t know. on the contrary, the more we eliminate the obvious risks, the higher the conditional probability of experiencing a crisis stemming from a non - obvious source. that is why upholding legislation to make the financial sector more resilient – in particular stronger bank capital – is such an important complement to stronger market regulation. better regulated markets may mean that banks bear less risk, but it does not mean they should not be strongly capitalised. 3. the role of private - public partnership in financial market reform the new market environment, however, is not only being shaped by official regulation, but also by

european commission ’ s public consultation on the regulation of indices : eurosystem ’ s response ”, november 2012, and “ reference interest rates : role, challenges and outlook ”, monthly bulletin, october 2013. while the competence to make euribor contributions mandatory lies with other eu and national institutions ( nb : the belgian supervisory authority and other supervisors forming a college of supervisors following an act of the european commission to establish a list of critical benchmarks ), the ecb is willing to provide all necessary bis central bankers ’ speeches regarding fx benchmarks, the ecb has also been active in the recommendations of the foreign exchange benchmark group of the fsb, along with other central banks and regulators. in particular, the ecb took the lead by reforming its own fx reference rates framework so as to discourage market participants ’ trading activity related to it. given that ecb reference rates are provided as a public good for individual citizens and institutions, it is essential to safeguard a high level of integrity. 4. concluding remarks let me conclude. policy interventions are undoubtedly having an impact on market functioning today. the key question, however, is what is the sign and magnitude of those impacts, and whether the tradeoffs they present are worth it. in the case of the ecb ’ s monetary policy, our ongoing monitoring so far does not suggest impairments to the price discovery process. but even more importantly, our measures are essential to restore a more robust economic environment where inflation is in line with our mandate. that environment is the most important variable for dealers and investors and therefore for market functioning. what is more, it is important to remember that not only policy interventions affect market liquidity. for example, high frequency electronic trading has been blamed for various rapid market moves and charges have been brought against some uses of such technology. 12 though innocuous in certain situations, such technology can also raise barriers to some investors ’ access to liquidity, which would narrow the range of trading interests and could exacerbate volatility spikes when no market participant is there to “ catch a falling knife ”. so to return to my initial question of how changes in market structure will affect the funding strategies of long - term borrowers, the best answer i can provide is that the interests of regulators, issuers and investors are aligned. all want markets to be able to absorb debt without large dislocations and price formation to be orderly and transparent. this requires that we continue the direction set in pittsburgh in