learned from the crisis that we have just experienced. this means that collective surveillance has to be stronger, taken more seriously and that this bis central bankers ’ speeches common governance covers both budgetary and structural policy. we believed that in order to share the same currency, co - ownership rules would be enough. but we needed a marriage contract! we might achieve this after another convergence process which would see the countries which use the euro harmonising according to best practice in every domain – i spoke of this in a speech i gave in athens on 9 july last. at the end of the day we might consider new ways of sharing sovereignty, also in fiscal matters, for example by creating a common financial intervention capacity for the euro area countries. but prior to this we need greater convergence and more growth, via reform and investment, as suggested by jeanclaude juncker. these are the necessary conditions to re - create confidence between countries and to win back citizens ’ confidence in europe. bis central bankers ’ speeches

important, if elementary. individual banks have also been able to increase their exposure to borrowers with which they do not have a lending relationship. ( indeed, some commentators suggest that it may sometimes be more effective for second - tier and smaller banks to take corporate credit exposure via the derivatives market than via participation in the lower tiers of loan syndicates. ) if, overall, the result were a greater dispersion of risk around the banking system and fewer large exposures relative to capital, the system as a whole would probably be safer even if, net, no credit risk had left the banking industry in aggregate. according to various surveys, some credit risk has been shed to non - banks, including insurance companies, pension funds and hedge funds. that too should, on balance, promote the resilience of the system, not least because non - banks are not part of the core payment systems that underpin our financial markets – provided, of course, that banks prudently manage their counterparty exposures to non - bank sellers of credit protection. as others have argued, this is a change of degree rather than kind : with the growth of corporate bond markets, and especially securitisation, non - banks have been my thanks to mike cross, colin miles and david rule for long - running debates on the issues discussed here. for comments, to peter andrews, andrew bailey, alex bowen, alastair clark, paul fisher, damien lynch, peter westaway and simon wells. and to sandra bannister for secretarial support. for an early review, see rule, d, ( 2001 ) ‘ the credit derivatives market : its development and possible implications for financial stability ’, financial stability review, issue 10, june 2001, pages 117 - 140 and rule, d, ( 2001 ), ‘ risk transfer between banks, insurance companies and capital markets : an overview ’, financial stability review, issue 11, december 2001, pages 137 - 159. running credit portfolios for years. by separating the provision of liquidity from exposure to credit risk, credit derivatives, and the related developments in structured finance, give non - banks new ways of accessing credit risk. as well as more dispersed risk buttressing systemic stability, the innovation of credit derivatives has plausibly taken us a further step towards complete markets, in effect providing a richer market for credit insurance than previously existed. investors and others may, therefore, be able to get a little closer to the portfolios they really