andreas dombret : how to overcome fragmentation in the european financial market speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the 23rd european banking congress, frankfurt am main, 22 november 2013. * * * introduction ladies and gentlemen, it is a pleasure for me to share some thoughts with you on the subsequent discussion of how to overcome fragmentation in the european financial markets. when introducing a panel discussion, a sensible piece of advice is always to be briefer than anybody dared hope. i intend to follow this recommendation and will therefore limit my introductory remarks to no more than 15 minutes. allow me to talk about four aspects that we at the bundesbank consider of particular importance when thinking about fragmentation within european monetary union. first of all, let me note that diagnosing financial fragmentation requires normative judgement. moreover, fragmentation is, to some extent, natural. it reflects structural differences between national markets, which are not bad per se. second, let me share my thoughts on fragmentation and its implications in a monetary union. and third, we also need to look at supervision when talking about fragmentation and its roots. i will argue why the european banking union, in the bundesbank ’ s view, is an important step towards a more integrated european financial market. finally, let me briefly touch upon the issue of fragmentation in the real economy. financial market fragmentation : a bad thing or to some degree natural? let me come to my first point : the reasons for fragmentation. the most obvious source of financial market fragmentation is the existence of different currencies. as we all know, in the euro area this source of fragmentation was eliminated by the introduction of the euro. but even before 1999 there were various political initiatives with the objective of overcoming market fragmentation in europe. most notably, let me mention the eu ’ s internal market, which guarantees free movement of goods, capital, services, and employees. nevertheless, financial market fragmentation within the euro area has been discussed in quite some depth over the past few years. probably most observers would agree that financial markets in today ’ s european monetary union are still segmented or fragmented – especially when compared with the situation before the crisis. but diagnosing financial fragmentation is by no means a purely technical exercise with a clear result. in the end, it requires a normative judgement, offering answers to questions such as : which differences are well - founded and therefore justified? which differences are not well - founded and, hence

andreas dombret : challenges on the road ahead speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the 13th euro finance week, frankfurt am main, 16 november 2010. * 1. * * introduction professor weder di mauro, professor stark, ladies and gentlemen, it is a pleasure for me to speak to you today. although the crisis is not over yet, making 2010 the fourth year of the crisis, the recovery of the global economy got underway in spring 2009 and remains on track. it is therefore all the more important for firms and policymakers alike to focus on what will come after the crisis and the challenges on the road ahead. the key question now has to be how to get the economy back onto a path of strong, balanced and sustainable growth. our session is entitled “ economic and financial stability in europe : the road ahead ”. with this brief in mind, i would like to focus on two core issues on the way to an environment that supports solid growth. first, the ongoing reform of the financial system, as only a robust financial system provides a basis for sustainable growth. the financial sector is more than just a part of the economy ; it also plays a crucial role in capital accumulation. in particular, financial stability is a prerequisite for an efficient allocation of capital. second, the lessons the euro area should learn from the crisis, especially from its most recent phase which is characterised by a government debt crisis. the sustainability of public finances is essential for the confidence of market participants such as consumers and investors. and a sound macrofinancial environment is key for financial stability, as the last months have demonstrated. 2. providing a basis for sustainable growth : a more robust financial system the current crisis originated as a pure financial crisis. however, over its course, the financial crisis spilled over to the real economy and thereby demonstrated very plainly the strong interconnection between the financial and the real spheres and how vulnerable the real economy is to disruptions to the financial system. at this point in time, discussions about concrete financial reform measures are well advanced. the g20 have proposed a comprehensive plan to overhaul financial regulation. this agenda shows that many lessons from the crisis seem to have been understood and that essential aspects of the regulatory framework are currently being improved. the overall purpose is to come up with a system that is more resilient to shocks. as a first line of defence at the microprudential level, the