of making cross - border payments. in particular, transaction volumes in money markets rapidly reached high levels while typical bid / ask spreads decreased almost immediately to very low levels. this indicates the depth and high degree of liquidity that the euro money market has already achieved. a feature of the current stage of the development of the euro money market, which is particularly worthy of note, is that differences in overnight interest rate spreads mainly reflect differences in the credit standing of banks rather than that of the country in which the transaction takes place. these structural developments are, of course, positive. for the eurosystem ( i. e. the ecb and the national central banks of the 11 countries participating in the euro area ) the existence of a deep and liquid money market enhances the efficiency of monetary policy operations. in this respect, i should like to draw your attention to the “ market friendliness ” of the framework applied by the eurosystem to the conduct of monetary policy operations. by this i mean that the framework is based on tenders in which markets decide who receives the liquidity. the standing facilities are open and recourse to the marginal lending facility is not subject to scrutiny. in addition, the list of eligible collateral is extensive. prospects for the development of financial markets in the euro area looking now at the financial markets from a broader perspective, it is important to remember that the financial markets of the euro area began the process of integration before the start of stage three of economic and monetary union. an indication of the pace of integration before january 1999 is provided in particular by the evolution of spreads between yields on the bonds issued by the various central governments of the euro area. these spreads narrowed continuously from mid1995 onwards and their volatility was also noticeably reduced during this period. factors contributing to this favourable pattern included increased convergence towards low rates of inflation across the euro area during stage two, the gradual reduction and finally the disappearance of exchange rate risks, the commitment of governments towards improving the sustainability of public finances, and the increase in the depth and liquidity of government bond markets. as i have already said on a previous occasion, i believe that the interest rate markets of the euro area will increasingly provide an accurate reflection of the differences in credit quality between various issuers as well as differences in liquidity between bonds, while divergences purely related to the location of market participants within the euro area will become less and less relevant. it seems highly likely that the capital markets of the euro area

particular attention which i shall briefly elaborate. 1 / 5 bis - central bankers'speeches ( a ) firstly, technology risk : the ongoing fintech revolution in banking is bringing a disruptive paradigm shift in the banking services. banking services are now being bundled with other financial and non - financial services and giving consumers the convenience of accessing the full spectrum of financial products. indeed, the pace of technological changes is so rapid that banks will have to transform like technology companies continuously innovating and investing in technological upgradations. the risks of cyber - attacks, data breaches, and operational failures have also increased. ( b ) secondly, business risk. as the recent examples of some international bank failures have demonstrated, banks get into trouble due to fundamentally flawed business models. sometimes banks follow inherently risky strategies with the confidence that their bank has mitigating controls. however, their assumptions may not hold true either due to internal control failure or due to exogenous factors. the board plays a vital role in independently assessing the business model and its attendant risks. it is important for banks to carefully assess their own unique circumstances and capabilities, conduct thorough analysis, and tailor their strategies accordingly. while it can be valuable to learn from the experiences of other banks, adopting their strategies without considering the specific context and requirements of the organization may lead to unfavourable outcomes. therefore, boards should be cognizant of their business model and its potential downsides, both in near term and in future. ( c ) thirdly, there is operational risk due to various factors such as high attrition, lack of succession planning, skilling of staff, outsourcing, etc. ( i ) attrition and high employee turnover lead to loss of institutional knowledge, disruption in services and increased recruitment costs. similarly, lack of succession planning, particularly for critical roles, can pose significant operational risks. ( ii ) ensuring that employees have the necessary skills and knowledge is imperative to adapt to new technologies and business practices. ( iii ) risks also emanate from outsourcing, including potential loss of control over critical operations, data security breaches, and increased dependency on thirdparty providers. ( iiii ) banks also need to be careful about process risks where errors, inefficiencies or breakdowns in operational processes can lead to financial losses, compliance failures or customer dissatisfaction. operational risks stemming from ethical issues at the operating level can also have significant repercussions for banks, including reputational