in raising short - and long - term capital, whether on a one - off basis or in the framework of investment funds ; the management of asset and liabilities portfolios for individuals or firms, and intermediation in the capital marketall of them outside the banking system. in order to create significant nonbanking intermediation it is necessary to return to the problem of the current concentration of the financial services, and introduce the measures we have mentioned on various occasions for dispersing the foci of financial power in israel's economy. because of the process of globalization that israel is currently undergoing, this involves building cooperation with international financial institutions rather than reducing the existing size of commercial banks. why would this make monetary policy more efficient? because the aim of monetary policy is to influence the public's economic decisions. the existence of developed nonbank financial intermediation enables the interest rate to have a direct effect, not only via the banks, on the behavior of savers and borrowers. a better balance between banking and nonbanking intermediation also improves management by the business sector, because the public, which provides firms with capital sources via the capital market, has long - term considerations, while the banks, which provide firms with loans, have short - term ones. the combined outcome is that monetary policy is provided with another channel of influence, which could produce more rapid results than in a situation where it operates solely via the banking channel. this promotes lower fluctuations in the interest rate and greater stability in the financial markets. this stability is one of the major preconditions for sustainable economic growth. conclusion opening the financial markets is necessary for the benefit of both the individual and the business sector, not only because of the advantages ensuing from a more competitive market. this policy also enables more efficient use to be made of policy instruments, and everyone benefits from that. note in this context that the process of the structural change of the financial markets, only part of which has been mentioned here, has come to an almost complete halt. the reasons for this should be examined, the necessary conclusions drawn, and steps taken to return to the implementation of the changes required for a modern country that wishes to integrate in the global economy.

towards more disintermediation from larger corporate issuers has been observed in recent years, and this trend will most likely continue. by contrast, small and medium - sized enterprises ( smes ) are more dependent on their respective domestic banking sectors and are subject to tighter credit conditions than larger firms that have greater access to global financial markets. the question arises as to how these restrictions could be overcome. a reopening of the abs market may be one way of enhancing funding conditions for smes. it will therefore be essential to better understand the factors that still constrain the recovery in this market and why investors are shying away, despite proven good performance and very few defaults on european abss. the regulatory treatment of abss, in particular the bis central bankers ’ speeches proposed regulatory capital charges for banks and insurers, could be a factor, as could a lack of secondary market liquidity and the relative opacity of the loans packaged in an abs. in this respect, let me also mention the eurosystem ’ s abs loan - level initiative. in november 2012 the ecb informed the public about the implementation of loan - level data reporting requirements for asset - backed securities as part of the eurosystem ’ s collateral framework. 1 the abs loan - level initiative makes use of the european datawarehouse, the single loanlevel data repository for the handling of loan - level data reporting, which became operational on 3 january 2013. as a consequence, for residential mortgage - backed securities and for asset - backed securities whose cash - flow - generating assets comprise loans to smes, the reporting requirements became mandatory as of 3 january 2013. commercial mortgagebacked securities must comply as of 1 march 2013, and other asset classes ( auto loans, consumer finance loans, leasing receivables ) as of 1 january 2014. while the ecb launched this initiative in the context of its collateral framework, a positive externality is that the initiative should also support the revival of this market segment by increasing its transparency and therefore investor confidence. the ecb also helps to accompany the fundamental change in the financial sector by changing the market structure and infrastructure, e. g. by actively supporting the legal entity identifier ( lei ) initiative as well as enforcing financial integration via the eurosystem ’ s target2 - securities ( t2s ) project, which will make cross - border settlement identical to domestic settlement and hence the whole european securities market will become more attractive and cost effective.