bankers ’ speeches to the greek sovereign and which, on top of that, are subject to a “ haircut ”. this should offer sufficient protection. ” last year saw the start of the banking union. what is the next big project for the ecb? “ that would be the capital markets union. although it is not our direct responsibility – the european commission is responsible for the proposals – it is very important for us. a wellintegrated and deep capital market would facilitate the functioning of our monetary policy, as our key interest rates would then be transmitted more smoothly. and there would be more risk - sharing via ownership of assets. if an economic recession arose in a euro area country, an effective capital markets union would soften the consequences of that recession. but the benefits of a capital markets union can only be reaped if a truly ambitious approach is taken here. “ could you explain that some more? “ an effective capital markets union requires the harmonisation of company law, of bankruptcy law, of taxation of financial products and of regulatory and supervisory frameworks. that is an enormous task. this way firms could issue shares and debt across the union, to a much greater extent than they do now, as a result of the level playing field for all stakeholders ( the shareholders, the issuers, etc., ed. ). but we must not forget that the european countries have already come far in harmonising policy, especially the euro area countries. ” did eu commissioner jonathan hill not say that a capital markets union would not be in place before 2019? “ if it is completed in 2019, i would be very happy. ” bis central bankers ’ speeches

bail - in powers and having something that can be quickly and easily bailed in. it also requires contracts that recognise resolution powers across different jurisdictions. though domestic and european law will create powers for the resolution authority to adjust the terms of local contracts, the law does not automatically provide for recognition of powers for contracts issued in different jurisdictions. derivative contracts, in their current form, are a potential show - stopper here. as structured, most contracts would allow the counterparties in another jurisdiction of a firm that had been put into a resolution to close out their contracts and to seize collateral covering their replacement value. for example were a resolution authority in europe to put a cross - border bank into resolution, close - out by us counterparties could trigger a disorderly unwinding of the derivatives book undermining the effectiveness of the operation. the international regulatory community is working with the international swaps and derivatives association to develop a revised protocol for derivatives which put in place a stay on close - out rights to permit the orderly use of resolution powers. drawing up a revised standard for derivative contracts is just the first step ; the next and harder step is effecting a move of the hundreds of trillions of dollars of derivatives onto a revised set of contacts. the way forward will likely entail the major dealers, the ‘ sell side ’, who together account for around 80 % of contracts in the market, moving first. structural reform there is one other, extremely important element of the agenda to end too big to fail – structural reform. legislators and authorities worldwide have concluded that simply breaking banks up is not the answer. however, some jurisdictions – particularly the those with very large, international financial sectors – have concluded that, given the risks, structural reform measures are also necessary to ensure that the parts of banks crucial to the domestic economy are insulated and kept apart from riskier activities and can be resolved if necessary. the uk, through the independent commission on banking proposals, and the us, through dodd frank, are key examples of this. the eu have also proposed a structural reform measure of this nature. i do not want to go into the detail of the reforms, which can take very different approaches. the reforms are, in the general, complementary to the resolution agenda. by seeking to ensure that critical economic functions are insulated from riskier parts of the group, they make it easier for the resolution authority to protect continuity in those services through a resolution scenario. all entities within the group, of course, still need