. deposit guarantee system a common deposit guarantee scheme can be seen as a completion of the banking union. the planning of such a scheme is still in a very early phase and would require harmonisation of the national schemes as a first step. the european commission is mandated to revisit the issue in 2019. but i assume that the european wide deposit guarantee system will be promoted earlier than 2019 since it would fit naturally inwith the ssm and the srm. a capital market union for europe following the initiation of the european banking union, commission president juncker promised in july 2014 to create a european “ capital markets union ”. as he explained it, “ to improve the financing of our economy, we should further develop and integrate capital markets. this would cut the costs of raising capital, notable smes, and help reduce corporations ’ high dependence on bank funding ”. last week, the european commission launched the action plan on building a capital markets union ( cmu ). the capital markets union is a good initiative. the ecb and the bank of england have already been active in some capital markets issues, especially reviving the eu market for a high - quality securitization. the cmu should help mobilise more capital in europe and especially channel it to financing of the corporate sector. by opening up a wider range of funding sources for investments the cmu can reduce the bank - dependency of european bis central bankers ’ speeches finance and thus the vulnerability of the eu economies and corporations to banking shocks. the cmu can also deepen financial integration and increase competition in the eu financial markets. conclusions : some enhancements ladies and gentlemen! to conclude, i would like to express some additional views on the banking union and the capital markets union, as i think that some enhancements would be needed. the capital markets union needs robust banks. the banking union was a major step in the right direction. the bu is mandatory for the euro area countries, while the other member states can join the bu on a voluntary basis. it is important to strive for an as unified approach to bank supervision as possible in the whole eu and including also the eea countries and others. this is so because banks are and will be of high importance for the sme financing, and the future playing field may not become quite level in the sme financing in the future capital markets union without some extra efforts. moreover, for ensuring financial stability and capital market integration, the bank - sovereignnexus has to be in

resulted from the need to address first the consequences of the global financial crisis and of the sovereign debt crisis, and subsequently those of the pandemic. the rapid deterioration of the economic outlook, which is mainly affected by the exceptional rise in energy costs, still requires progressive action, taking careful account of the risk of inflation being unacceptably high for longer than expected and also considering, with the same level of attention, the possible repercussions of changes in cyclical conditions. aware though we are of the risks to financial stability and the implications for the preservation of price stability in the event of a more severe, unexpected deterioration in economic conditions, we can certainly discuss the pace at which to raise policy rates, but i believe that there should be no doubt as to the direction taken or of the fact that interest rates have not yet reached a level consistent with achieving the inflation objective of 2 per cent over the medium term. following the necessary normalization of monetary conditions, the cost of debt servicing is set to rise. this makes it all the more important to set out a realistic path to continue the process of gradually reducing the high public debt - to - gdp ratio initiated in the past two years. this would be a decisive signal of credibility for the markets, which would translate into lower sovereign risk premiums, thereby limiting the interest expense and reducing the effort needed to achieve the fiscal targets. while the redistributional and allocative consequences of higher energy costs cannot be ignored, the scope for supporting households and firms is likely to be much more limited than in the last two years. additional room for manoeuvre may be gained by reducing other expenditure. temporary and targeted measures geared towards the most distressed households and industries may help to contain the fall in real income and, through this channel, the inflationary pressures associated with wage demands, without compromising the fiscal balance. 8 / 9 bis - central bankers'speeches over the last two years, the reduction in the debt to gdp ratio has benefited from the faster - than - expected economic recovery and has been facilitated by the increase in prices, which has been as unwelcome as it has been widespread and protracted. today, however, we can only hope for and seek a rapid reduction in the'inflation tax ', for the sake of economic stability, the protection of savings and to provide respite to those most affected by the exceptional rise in energy costs. care should be taken not to repeat the mistakes of forty and more years ago