deepen the integration of the capital markets in order to improve risk sharing. experience from the usa tells us that integrated markets for capital cushion around 40 % of total cyclical fluctuations between the us federal states. together with credit markets and fiscal buffers, this cushions almost 80 % of an economic shock in the us. the situation in europe is slightly different : here, it is primarily the credit markets which act as buffers – and not particularly effectively at that. all told, just 40 % of a shock is cushioned in this way. so boosting the role of the capital markets and integrating them more effectively across national borders would indeed help to improve risk sharing in europe. together, improving both funding of the real economy and risk sharing will make the european capital markets union a worthwhile project – and i believe that the experiences we gather from this initiative may also be of interest for the asian economic area. 4. the european capital markets union – a blueprint for asia? of course, i am not calling for an asian capital markets union. the situation in the eu is quite different to that in asia, of course. nevertheless, cross - border transactions among asian countries gain in importance when it comes to infrastructure projects. and i do believe that asia ’ s infrastructure - related funding needs will require financing from non - asian investors as well. this leaves me in no doubt that the renminbi clearing hub here in frankfurt will prove to be particularly beneficial going forward in attracting european funds for asian projects. but in general, more deeply integrated global financial markets – accompanied by sound regulation to avoid negative spillover effects and financial contagion when the going gets tough – might be an answer to the challenges which asian economies are currently facing. this is because, bis central bankers ’ speeches at the end of the day, the european capital markets union is implementing the well - known principles of good financial sector governance. simple though this may sound, the european capital markets union shows us that putting these principles into practice will be far from easy. the capital markets are a complex beast, and capital market funding comes in many shapes and sizes. corporate bonds, private and listed equity capital, venture capital and peer - to - peer loans are just some of the instruments in the market. and deeper integration affects not just the financial instruments themselves but also integral components of the respective markets, like exchanges and central counterparties. let me stay with that last point for a moment, because the importance of effective and robust financial market infrastructures

500 times. but contrast this with the almost 14, 000 citations received by john taylor ’ s “ discretion versus policy rules in practice ”, arguably the most cited paper in monetary economics. [ 4 ] or the around 12, 500 times that michael woodford ’ s opus magnum “ interest and prices ” has been cited. this suggests that monetary policy implementation does not stand at the forefront of academic research in monetary economics and public attention more generally. it is, however, at the heart of what central banks do. despite that, even most central bankers only know how their respective central bank “ does it ”. we all set interest rates. but how we get there can differ markedly. two months ago, the ecb ( european central bank ) governing council announced changes to its operational framework for implementing monetary policy. [ 6 ] in my speech i want to discuss how these changes came about, and what they might mean for the future. i will structure my talk in three parts. first, i will briefly recount how we ended up with the operational framework as it currently stands. second, i will describe the most important changes that we have decided. and third, i would like to identify a couple of factors that merit close scrutiny over the coming two years until our next scheduled review. 2 the road to the current operational framework before i get into the nitty - gritty, let me first define what i actually mean by operational framework. the ecb ( european central bank ) governing council takes monetary policy decisions based on our monetary policy strategy. and this strategy is centred around our primary objective of maintaining price stability. the purpose of our operational framework is to steer short - term money market rates closely in line with these mone ‐ tary policy decisions. or, put differently : our monetary policy strategy guides us in deciding the appropriate level of short - term interest rates. and the operational frame ‐ work then enables us to align short - term market rates with this appropriate level. how did we end up with our current operational framework? before the global financial crisis, many central banks implemented monetary policy using a corridor system. in the case of the eurosystem, the ecb ( european central bank ) governing council set three interest rates with specific spreads between them. the eurosystem provided a limited amount of liquidity at the interest rate on the main refinancing operations, the mro ( main refinancing operation ) rate. euro area banks with a remaining deficit of reserves were able to