too big. hence they created a major risk for the stability of the european financial system. let me present some evidence provided by the esrb. first, consider the amount of lending. in the 1950´s, bank loans to the domestic private sector as a proportion to the domestic gdp were almost equal in europe, us and japan, at about 25 per cent. in 2010, the figure for europe was well over 100 per cent of the gdp, while that in japan was about 90 % and in the us only close to 50 %. 1 in some european countries, the size of the banking sector more than doubled in a mere 20 years between 1990 ’ s and 2010. among the countries that recorded the biggest increases were cyprus, iceland, ireland, spain, portugal and greece. bis central bankers ’ speeches second, european banks ’ balance sheets have ballooned. the total assets of the eu banking sector were over three times the eu gdp in 2013. in several eu countries, the ratio is much bigger. the japanese banking sector is more than half of the relative size of the european banking sector, but the us banking sector is only a quarter of the size of its european counterpart. third, the european banking system has also become more concentrated. since 2000, the share of the three largest domestic banks of the national banking system total assets – the so - called c3 ratio – has increased in all major eu countries except italy. ( in finland, of which i am the most familiar with, the c3 ratio is close to 90 %, one of the highest figures in the eu. ) fourth, european banks dramatically increased their leverage before the crisis. for example, as documented by the esrb, in the late 1990 ’ s the median equity to assets ratio of the largest 20 listed banks in the eu was around 6 %. by 2008, this median level was only just over 3 %. because of the deficiencies of the basel ii capital rules, banks were able to halve their equity ratios without any increase in their risk - weighted regulatory capital requirements. the increases in bank sizes and bank lending have not been matched by an equivalent increase in market - based funding. for example, the ratios of stock market capitalisation to bank credit have decreased considerably in the 2000s in the biggest eu countries, much more so than in the us. as a result, the european financial structure has become even more bank - based than before. the large reliance of european firms – especially the smes – on bank finance has

in a new regulatory and supervisory environment. in november last year, the ecb took over the responsibility for supervising banks in the countries belonging to the banking union. it is less well - known that, at the same time, the ecb became the ultimate macroprudential decision - maker in the union. [ slide 25 ] the ecb reinforces but cannot substitute national macroprudential policies more specifically, the ecb can apply higher requirements for specific macroprudential tools than proposed by the designated national macroprudential authorities, if it deems that the suggested national measures are inadequate. in contrast to the single monetary policy, macroprudential policy in the banking union is a joint responsibility between different authorities. the main responsibility in macroprudential policy lies with national authorities. they are in the best position to detect country - specific systemic risks and take appropriate measures to address them. the role of the ecb in macroprudential policy is to enhance national policies and reduce the inaction bias inherent in taking potentially unpopular and intrusive national actions. the european systemic risk board ( esrb ), in turn, monitors the development of eu - wide cross - border and cross - sectional systemic risks and provides guidance and recommendations to the national authorities. [ slide 26 ] macroprudential policy is important in a time of exceptionally accommodative monetary policy a necessary precondition for successful macroprudential policies is the availability of sufficient macroprudential toolkits. importantly, the capital requirements regulation and directive ( crr / crd iv ) provide the ecb and the national authorities with a common minimum set of macroprudential tools for the banking sector. these include countercyclical capital buffer requirements, capital surcharges for systemically important institutions and minimum risk weights for real estate exposures, for example. however, in most euro area countries, the national toolkits should be strengthened. for example, in many countries the tools for containing excesses in housing markets and for building resilience against the realisation of housing - related risks are not strong enough. the availability of strong national macroprudential toolkits and the courage to use those tools are of utmost importance in the environment of very low interest rates. the ecb ’ s governing council is closely monitoring any potential risks to euro area financial stability, including those from excessive risk taking. currently, these risks are contained. should they emerge, macroprude