and validation of records, they may even challenge the basic business models of intermediaries or central market infrastructures. so should policymakers be concerned about this? generally speaking, it is up to market incumbents to rise to this challenge. in particular, banks facing questions about their business models should see the new wave of innovation as an opportunity – to reach out to new customers, to increase efficiency, to revamp their business models. after all, they still retain economies of scale unavailable to small start - ups and intellectual capital unavailable to outsiders. fintech may be exactly the shock the sector needs to restructure after the crisis. but policymakers also need to monitor developments closely. as more firms enter the market it will be important to ensure a level playing field between entities providing similar financial services. moreover, market fragmentation might create challenges for a single european market, as market innovators have a tendency to build closed - loop solutions or “ silos ”, and challenge the existing approaches towards containing systemic risk. for example, the emergence of popular retail payment platforms in one country could undermine the market integration already achieved in the context of sepa. we will have to see how the market evolves before assessing whether regulation should provide a steer in one direction or another, whether the new approaches will provide full legal certainty to market participants, and whether regulatory space can be provided to let innovation develop without hindering financial stability. but we have started moving along a steep learning curve. for example, the cpmi has launched work in partnership with iosco and other standard - setting bodies on the impact of the distributed ledger technology and related digital innovations on payments and market infrastructures. conclusion let me conclude. the euro area is still recovering from a once - in - a - generation economic and financial crisis that has left deep scars on the economy. it urgently needs higher growth to bring down high unemployment, to deleverage the economy and to raise inflation back to our price stability objective. uncertainty in the financial sector only blocks that path. to reduce uncertainty, both policymakers and financial institutions need to play their part. they need to ensure that the financial system is fit for purpose and able to finance the recovery. and they need to do so today, not tomorrow. but we should keep in mind that the challenges facing the financial sector also present an opportunity. a tough business environment can push banks to be more efficient. a new, stable regulatory environment will make the financial system safer. and a disruptive technological environment

luis de guindos : deepening emu and the implications for the international role of the euro speech by mr luis de guindos, vice - president of the european central bank, at the occasion of the joint conference of the european commission and the european central bank on european financial integration and stability, brussels, 16 may 2019. * * * it is a great pleasure to be speaking today at the joint european commission and ecb conference on financial integration in europe. the choice of the international role of the euro as the guiding theme represents a change in focus in the discussions on economic and monetary union ( emu ) reforms, from a post - crisis response to a broader agenda. at the same time, europe is facing new challenges, not least a return to fragmentation at the global level and the united kingdom ’ s departure from the eu, amid heightened political uncertainty. in this context, i would like to give an overview of where we are in terms of european financial integration and draw lessons for the concrete policy actions that would promote integration. where do we stand on financial integration in europe? at the ecb, we analyse two dimensions of financial integration : price convergence across the euro area and quantity - based integration via cross - border activities. 1 the great financial crisis caused fragmentation along both of these dimensions. since then, we have made great progress thanks to measures to reform emu and the announcement of our outright monetary transactions. these actions, together with a wide range of policy measures taken in the years that followed, put us back on the path towards greater integration. however, this process has stalled somewhat in the last two years. on the capital markets side, most of the recent positive developments in terms of financial integration have been driven by an overall reduction in price dispersion, rather than an improvement in holdings of non - domestic assets, or cross - border holdings. going beyond the aggregate figures, however, we see that the investment fund sector makes a positive contribution to integration by allowing investors to spread and diversify their asset holdings across countries. in 2017, investment funds held roughly 78 % of all their holdings in bonds issued outside their own domicile. 2 this is important because more cross - border holdings are needed to support consumption smoothing in the face of shocks and to enhance crossborder risk - sharing. in banking markets the picture is also mixed. in general, we have seen a reduction in the crosscountry dispersion of banks ’ funding costs and lending rates, pointing