26. 02. 2019 keynote speech bloomberg capital markets forum madrid pablo hernandez de cos governor introduction let me begin by thanking bloomberg for their kind invitation to participate in the opening session of the bloomberg capital markets forum madrid. in my address i shall refer firstly to the phenomenon of banking disintermediation in spain in the european context, discussing the main implications. and secondly, i shall focus on the importance of the capital markets union project as a private risk mitigation and sharing mechanism in the economic and monetary union ( emu ) which, in conjunction with the banking union, will provide for an increase in financial stability in the euro area. banking disintermediation in europe and in spain as is well known, in the continental european countries banks have traditionally played a key role in the intermediation of economies ’ financial flows. however, recent years have seen an increase in european firms ’ preference for tapping capital markets. fixed - income financing has thus risen from accounting for 8 % of european firms ’ total financial debt at end - 2007 to 12 % in the third quarter of 2018. spain has been no stranger to these global trends of banking disintermediation. indeed, the proportion of fixed - income securities relative to the business sector ’ s financial debt has risen over the same period by 10 percentage points ( pp ). this has been mirrored by a fall, since 2010, of 9 pp in banks ’ weight in the total financial assets of the financial sector. this gradual increase in business financing on the capital markets by means of the issuance of fixed - income securities is due to a series of factors, some transitory and others more structural in nature. notable among the transitory factors common to all euro area countries was the introduction in 2016 of the eurosystem ’ s corporate sector purchase programme, which is part of the asset purchase programme. this programme has contributed to boosting corporate funding through fixed - income issues, by reducing their cost relative to bank financing. in any event, analyses by banco de espana economists show that this programme also contributed indirectly to improving the access by smes to bank funding. this was because banks allocated a high proportion of resources freed up by the repayment of loans by securities - issuing firms to funding smaller - sized firms without access to the securities markets. following the end of net asset purchases, since early 2019 the eurosystem ’ s asset purchase programme has remained active by reinvesting the amounts maturing on the securities purchased. it is thus

arce, o., gimeno, r., and mayordomo, s. ( 2017 ) “ making room for the needy : the effects of the eurosystem ’ s corporate sector purchase programme ”, banco de espana working paper no. 1743. see aiyar, s., calomiris, c. w., and wieladek, t. ( 2016 ) “ how does credit supply respond to monetary policy and bank minimum capital requirements? ”, european economic review, 82, 142 - 165, fraisse, h., le, m., and thesmar, d. “ the real effects of bank capital requirements ”, hec paris research paper no. fin - 2013 - 988, de jonghe, o., dewachter. h.. and ongena, s. ( 2016 ) “ bank capital ( requirements ) and credit supply : evidence from pillar 2 decisions ”, national bank of belgium no 303. for detailed evidence on how p2p platforms compete with banks, see de roure, c., pelizzon, l., and thakor, a. “ p2p lenders versus banks : cream skimming or bottom fishing? ”, safe working paper no. 206. 5 / 6 benefits for the society, including a greater financial inclusion by reducing intermediation costs, which would improve the access to funding of households and smes. in any case, at this stage, the ultimate impact of new technologies on the structure of the financial system is highly uncertain as it will depend on different factors including the regulatory treatment of the new players. 10 today´s conference will cover all these issues related to the recent changes in the structure of financial markets and their implications for the banking system. we have the privilege to have as speakers experts in those areas from academia, policy makers, think tanks and the banking industry. i am sure that we will have a very productive debate and that we will improve our understanding of these issues. finally, allow me to express once again my gratitude to the co - organizers of this event for making the conference possible, and to wish all the participants a very fruitful meeting and a pleasant stay in madrid. and without further due, let me now introduce our first speaker, governor philip lane. it is a special honor for us to have him here today. he is especially suited to be our first keynote speaker in this event because he has a profound knowledge of economy and finance