also bring new challenges and risks. for example, as a result of the shift in the relative importance of the transmission channels of monetary policy. interest - rate decisions may transmit to the real economy differently through markets than they do through the banking sector. this calls for careful analysis. and possibly a reassessment of the effectiveness of our monetary policy instruments. these instruments are bis central bankers ’ speeches currently primarily geared at the banking sector. however, to be able to influence financing conditions beyond the banking sector we may need to introduce new instruments. 15. another possible consequence is that risks may shift to the shadow banking sector. a sector that is currently less transparent and less regulated than the traditional banking sector. it is yet unclear what could be the financial stability implications if such a development were to occur. in any case, it would warrant enhanced monitoring of developments in the sector. one could even argue that a more formalized supervisory framework should be put in place. finally, it could be conceivable that macro - prudential policy measures would have to be applied beyond the banking sector. 16. as for the potential risks associated with developing capital markets, let me highlight one more issue. some might worry that by developing financial markets we will again see the introduction of complex financial instruments. the type of obscure instruments that according to many were the root cause of the global financial crisis. here, i would like to reiterate firmly that this is clearly not what i envisage. rather, the goal of capital markets union is to create a level - playing field by introducing simple standards that improve transparency. only then, can capital markets union foster financing flows that support economic growth in a sustainable way. dear participants, let me wrap up my address. 17. i presented to you a central banker ’ s view on capital markets union, and why i think this a very important initiative. today, the discussion on capital markets union is still at an early stage. the agenda is being set as - we - speak. having an exchange of views on such an important topic with esteemed members of the capital markets community could not have come at a better time. therefore, i very much look forward to the discussions later today. i ’ m confident that this conference will yield many interesting insights. new ideas that will bring us closer to completing this important pillar of our economic and monetary union. thank you for your attention. bis central bankers ’ speeches

effectiveness of the system, to direct sufficient resources to it and to ensure equal opportunities for children from all strata of society in order to encourage and nurture excellence. education is a very important issue that will aid economic growth in the long term as well as reduce social gaps. in israel, as elsewhere, the yield on education has increased a great deal in recent years. 3. banking competition : the bachar committee achieved its mission of increasing competition in the credit field, but now we face the challenge of boosting competition in the retail field. here, the supervisor of banks is the major player, and together with the management of the bank of israel and me, is examining ways to strengthen competition in the banking system including making it easier to transfer accounts from one bank to another, and more besides. there is the field of bank charges, and in this context the bank of israel has already prepared a bill that would grant the supervisor of banks the authority to regulate fees in areas that have no competition. this bill will be submitted in the next few days. 4. in infrastructure : in this context i refer to the fields of transportation – roads, rail, public transport – and the field of electricity – and here it is important to carry out the planned reforms. 5. real estate : here our emphasis is mainly on developing a more efficient real estate market, on land ownership ( the israel lands administration ) and on easing the bureaucratic processes such as planning, licensing and registration. reform in this field is clearly not a simple matter but it is important to begin freeing the real estate market in israel from its many current restrictions. 6. defense spending : this is very much on the agenda of the day, and i am happy to see that a committee headed by former director general of the ministry of finance, david brodet, is dealing with this subject, and the bank of israel is involved. clearly every country has the responsibility of defending its citizens, but it is difficult to know exactly what resources are required. it is easy to err in either underestimating or overestimating the funds needed. so it is important to establish from time to time a select group of professionals, such as the current committee, to check this matter thoroughly, and it is important too to follow through on any resulting recommendations. 7. health : this subject often pops up on the agenda and, among other things, it is important to examine the pricing of various health services. i would like to add here that overall the