integration in the euro area. third, the capital markets union and the banking union are intrinsically linked. more integrated capital markets support cross - border banking activities, while more cross - border holdings would allow banks to diversify, making them more resilient. from issuance to underwriting, banks provide essential services for capital markets. therefore, a more resilient and integrated banking system also supports the smooth functioning and further integration of capital markets. key legislative initiatives to advance capital markets integration to move forward on the legislative front, we need to finalise the implementation of the commission ’ s capital markets union action plan – without compromising on its ambition. this includes implementing proposals such as the consolidated tape, the targeted harmonisation of insolvency rules and the upcoming initiative on the withholding tax framework. we welcome the recent statement made by the co - legislators in april, in which they committed to finalising cmu legislative initiatives during the current institutional cycle, and the recent agreement on the european single access point. the esap will help to mobilise and allocate capital by making it easier for investors to identify suitable firms and projects to invest in. likewise, the proposed targeted harmonisation of insolvency regimes should make it easier to reallocate resources from failing firms and provide more transparency for cross - border investors. finally, a more efficient and harmonised withholding tax framework will reduce the burden and costs for investors and facilitate cross - border investment. beyond the current institutional cycle and the cmu action plan, eu legislators should also look at structural issues, such as improving the current architecture to enable more consistent and harmonised supervision of markets. conclusion the euro area financial system recently passed a real - life stress test. at the same time, the events of this spring underlined the importance of making decisive progress on the european banking union and capital markets union projects. the financial market turbulence and contagion from the united states and switzerland would have been far more muted had we been closer to our goals. completing the banking and capital markets union projects will increase cross - border bank lending and enhance the dynamism of public and private equity markets. both are key to enhancing integration and stability in the euro area financial system, and they will also ensure that the funding for the green and digital transitions is available to meet the challenges ahead. thank you for your attention. 1. rose, j. ( 2023 ), “ understanding the speed and size of bank runs in historical comparison

benefits to the retail payments market. for example, merchants were the initial drivers of the introduction of payment cards in the us in the 1930s and, just a couple of years ago, it was a mobile network operator in kenya that succeeded in making mobile payments widespread in that country. psd2 was introduced precisely because there is no good reason for the regulatory framework to protect the rents of banks. but policymakers also need to monitor carefully the system - wide impact of these technologies. innovation should not come at a cost to consumer protection. we do not want a situation where unregulated non - banks create pressure for a race - to - the - bottom among more regulated banks, which might be detrimental consumer security. nor do we want banks that must comply with higher consumer protection standards to be disadvantaged. so going forward, policymakers must ensure that the regulatory landscape is fair : neither stifling new operators, nor harming establishing ones. i say this as a central banker not only because one of the ecb ’ s statutory tasks is to ensure the smooth operation of payment systems. i say it because, ultimately, trust in payments means trust in money as a reliable medium of exchange. for a sound currency, consumers must have 100 % confidence that their money can be exchanged safely. 2. the markets challenge non - banks are not only increasingly entering the retail payments market in the euro area, however ; they are also entering the lending business. this brings me to the second challenge for euro area banks : the markets challenge. for some years now, we have been witnessing a trend towards more capital market - based financing in the euro area, driven by both deleveraging among banks and the very low cost of market finance. looking forward, the capital markets union ( cmu ) project promises to deloitte ( 2015 ), “ payments disrupted : the emerging challenge for european retail banks ”. ibid. bis central bankers ’ speeches further deepen market finance in europe by, among other things, making it easier for young firms to access risk capital and smaller firms to issue bonds, as well as deepening markets for high quality securitisation. so what will this mean for european banks? in the long run, deeper capital markets may lead to more competition in the provision of financial services and hence weaken banks ’ market power. for example, research looking at the pre - crisis period suggests that where banks face limited competition in their domestic markets, they tend to charge higher margins for lending to sm