exchanges or electronic trading platforms when they are sufficiently standardised and cleared through central counterparties – as was committed to in the pittsburgh g20 summit. conclusion let me conclude. today i have emphasised how banking union is an essential complement to the monetary union and how it will enhance confidence and foster integration in the european financial system. we have made impressive progress in developing and establishing the new european regulatory framework. the comprehensive assessment has made a big contribution to increase transparency in the european bank sector and ensured a successful operational start of the ecb ’ s new regulatory and supervisory powers. at this point, i believe that we will begin to see that banks are once again ready to play their role in financing the real economy. as borrowers ’ demand resumes, i am convinced that european banks will be in good shape to provide the funding that will support investment, jobs and growth. nonetheless, new macro - prudential challenges seem to be building in the non - banking sector, which have to be carefully monitored and authorities given the policy tools needed to properly address them. the ecb would need to be entrusted with macro - prudential instruments because only then can it be made fully accountable in ensuring financial stability in the euro area. thank you for your attention. bis central bankers ’ speeches

have to change their strategies. more competition means that capital is allocated more efficiently. it should promote access to new funding opportunities for companies, encourage investment and thus contribute to higher economic growth. small and medium - sized enterprises without direct access to capital markets, in particular, may benefit the most from de - fragmentation. in monetary unions in general, genuine financial market integration helps smoothing out the effects of asymmetric shocks via a mechanism of risk sharing. this can operate through income insurance, for example, when a country ’ s residents hold claims to dividends, interest or rental income from investments in other countries. in the u. s., this form of risk sharing has shown to be more important than federal budget transfers. in the euro area, such risk sharing will need to assume an increasingly important role, especially given the absence of a more significant central budget. however, it should be underlined that incomplete financial integration also carries significant risks. as the crisis has demonstrated, financial integration increased the risk of contagion, without in parallel generating adequate risk sharing arrangements to offset its adverse effects. for example, increased cross - border interbank funding was not accompanied by a sufficient diversification on the asset side. as a result, in some jurisdictions banks quickly accumulated significant exposures to local assets ( such as real estate ), and when the crisis bis central bankers ’ speeches hit, cross - border funding was quickly withdrawn and sizeable losses had to be absorbed within national borders. supervision exclusively at the national level allowed excessive imbalances to build up within the currency area. for example, net cross - border claims of banks in non - distressed emu countries vis - a - vis distressed countries almost tripled between 2003 and 2008 while crossborder claims within the core countries increased by factor of about 1. 7 over the same time period. lack of genuine financial integration and low financial sector resilience would continue to expose us to systemic risks further down the road. the new centralised bank supervision organised in the ssm can however help prevent such developments. the prudential supervision of credit institutions will be implemented in a coherent and effective manner. a fully integrated approach will be taken to the supervision of cross - border banks. joint supervisory teams will directly supervise significant banking groups – comprising supervisors from the ssm within the ecb and national competent authorities. this will enable the ssm to detect, early on, the build - up of imbalances and excessive risk - taking related to exposures to single