was minus €93 billion in distressed countries. of course, in principle firms from distressed countries can issue securities in non - distressed countries. in practice, however, it is legally complicated due to issues of different governing law, especially when securities are traded along a chain of financial intermediaries. this analysis points to two missing pieces in the euro area financial market : lack of retail banking integration and lack of capital market integration. the low level of retail banking integration reflects several factors, but diverging approaches to supervision and resolution are certainly among them. for one, the persistence of national borders in a european financial market has in the past created compliance costs and reduced the synergies of banking integration. a european commission survey in 2005 found that opaque supervisory approval procedures were a major deterrent to cross - border banking m & as. 4 moreover, national considerations may have reinforced the fragmentation of retail markets during the crisis. for example, some commentators have argued that supervisors erected de facto “ internal capital controls ” 5 within the euro area, which restricted the flow of funds between banks and within cross - border banks. a similar pattern can be observed in how national authorities in the euro area have dealt with failing banks. in general, non - viable banks were merged with other national banks, rather than being wound down or broken up and sold off. thus, what could have been an opportunity to increase foreign competition in domestic markets, and indeed to work through the crisis more quickly, in some cases ended up increasing national concentration. to give a comparison with the us, the fdic has resolved around 500 banks since 2008, mainly by selling parts of banks to other banks, whereas the equivalent figure for the euro area is around 50. 6 all this suggests that the move towards a genuine banking union in the euro area could help create the conditions for deeper retail banking integration. a single supervisory mechanism ( ssm ) should lead to harmonisation of rules and standards, and also remove distortions created by national borders. and a single resolution mechanism ( srm ) should ensure that see ecb report on financial integration in europe, march 2007. an example of this view is veron, n. ( 2013 ), “ banking nationalism and the european crisis ”, october. sapir, a. and wolff, g. ( 2013 ), “ the neglected side of banking union ”, note presented at the informal ecofin 14 september 2013, vilnius. bis central bankers ’ speeches banks are resolved from a european perspective and according to least

december 2013. bis central bankers ’ speeches quality securitisation in europe, which the ecb and the bank of england have been jointly pushing. 13 securitisation has the double benefit that it not only encourages existing originators to extend more sme loans, but to the extent that it partially removes credit risk from bank balance sheets, it may also help smaller, less diversified originators to enter the sme loan market. in this way, it could also mean that sme lending is less dependent on a few large banks in each country. it is worth reflecting, however, on what the new normal should be once the credit cycle picks up. on the one hand, there clearly benefits to having a more balanced financing mix. it is useful not only to provide a cyclical cushion in bad times, but also to increase market contestability and reduce over - banking in normal times. on the other hand, if what we are seeing is the beginning of a structural shift from bank to non - bank financial intermediation, we have to keep a close eye on the potential risks that might be building up. indeed, there may be little long - term value in shifting risk from a highly regulated sector to a lightly regulated one, particularly if more and more lending is taken up entities that fall outside the regulatory reach. conclusion let me conclude. my message today is simple : the euro area financial system has been hit by a major shock, which few of us foresaw, but through good policy choices it is possible to steer this development towards a positive outcome, while avoiding unintended negative consequences. and looking at the developments across the euro area today, in my view the right choices are being made. banks are already strengthening their capital as a result of the comprehensive assessment. the european supervisor will be fully operational in november this year. from next year we will start building up a single fund for european bank resolution. and initiatives are underway to strengthen access to finance for smes, especially through securitisation. for asia, there is every reason to be confident that the euro area is addressing the structural problems in its financial system, which should in turn support more sustainable growth in europe and for the world economy. we still have a long way to go, to be sure, but i am confident that europe has now moved from being a risk to the global economy to a partner in global growth. thank you for your attention. bank of england and european central bank, “ the impaired eu