started looking into the financial stability risks associated with asset management activities, as well as longer - term structural financial stability issues that may arise. this is not to say that the asset management sector is unregulated. in fact, we have a very successful investment fund regulation in europe. however, this regulation is largely tailored to protect investors rather than to contain risks for financial stability. we need to turn some of bis central bankers ’ speeches the instruments already available to managers of investment funds into macroprudential tools. specifically, additional liquidity requirements, guided stress tests, minimum and time - varying load, and redemption fees should be part of the macroprudential toolbox. well defined limits to leverage, especially synthetic leverage built - up with derivatives, should also be introduced. in general, it is necessary to intensify the oversight of systemically important non - bank institutions as is the case in the u. s. a. we need to curtail risks from these systemic players and raise their resilience through the financial cycle. a first step in this direction is the work done by the fsb that develops a common methodology to identify systemically significant non - bank and non - insurers. the fsb is currently also working on the systemic risks in the asset management industry. other measures concern activities or instruments used in the market - based financial sector. in particular, i have in mind minimum and countercyclical haircuts for securities financing transactions ( sft ). countercyclical haircuts would limit volatility and leverage in financial markets more effectively than the minimum haircut requirements recently recommended by the fsb. another important fsb workstream focuses on re - hypothecation and re - use of securities in the repo market. these create chains of inside liquidity that enhance the “ illusion of liquidity ”, which tend to disappear in times of stress. further work to understand the effects of these tools and how best to apply them in practice is encouraged. a new regulatory and institutional base in europe i have listed a number of tools that would help safeguard financial stability in the euro area. however, the legal and institutional base would need to be changed in order to implement the policies required to address the risks from non - banks. this is particularly true in the context of the implementation of the capital markets union, because it implies the creation of a single rulebook for capital markets oversight and the clear definition of the mechanisms at the european level

crisis of the euro, very often non - euro area member states or leaders, underestimate the amount of political capital that is being invested in the euro. and so we view this, and i do not think we are unbiased observers, we think the euro is irreversible. and it ’ s not an empty word now, because i preceded saying exactly what actions have been made, are being made to make it irreversible. but there is another message i want to tell you. within our mandate, the ecb is ready to do whatever it takes to preserve the euro. and believe me, it will be enough. there are some short - term challenges, to say the least. the short - term challenges in our view relate mostly to the financial fragmentation that has taken place in the euro area. investors retreated within their national boundaries. the interbank market is not functioning. it is only functioning very little within each country by the way, but it is certainly not functioning across countries. and i think the key strategy point here is that if we want to get out of this crisis, we have to repair this financial fragmentation. there are at least two dimensions to this. the interbank market is not functioning, because for any bank in the world the current liquidity regulations make – to lend to other banks or borrow from other banks – a money losing proposition. so the first reason is that regulation has to be recalibrated completely. the second point is in a sense a collective action problem : because national supervisors, looking at the crisis, have asked their banks, the banks under their supervision, to withdraw their activities within national boundaries. and they ring fenced liquidity positions so liquidity can ’ t flow, even across the same holding group because the financial sector supervisors are saying “ no ”. so even though each one of them may be right, collectively they have been wrong. and this situation will have to be overcome of course. and then there is a risk aversion factor. risk aversion has to do with counterparty risk. now to the extent that i think my counterparty is going to default, i am not going to lend to this counterparty. but it can be because it is short of funding. and i think we took care of that with the two big ltros where we injected half a trillion of net liquidity into the euro area banks. we took care of that. then you have the counterparty recess related