bond yields reflect a growing integration of this market segment. as to the derivatives market, i do not have to recall here that eurex has become the largest futures and options market for euro denominated derivatives, breaking new trading records last year by transacting over 1 billion contracts. progress also occurred, although at less impressive rates, in the corporate bond and equity markets. the elimination of the currency risk has diminished the importance of the local component in the securities business, with institutional investors increasingly taking a pan - european view in investment decisions. the corporate bond market has developed strongly and witnessed a large increase in issues since the introduction of the euro, although part of this increase was due to temporary factors, such as corporate restructuring and the liberalisation of the telecom industry. over time, stock price variations in the euro area have become more sensitive to pan - european evolutions and new data and less to local informations and news. however, not all wholesale markets are equally fully integrated, the repo market being a particularly special case. participants in this market segment continue to trade preferentially with national counterparts and a significant share of the transactions are secured by national collateral. according to our data at the ecb, about 40 % of all cash lending and borrowing against securities is conducted exclusively at the national level. at this point, i would also highlight that the markets where integration has advanced the least are in the retail sector. in this area, there may well be structural explanations. for example, the proximity to the customer. i note that a great deal of market localisation is present in the u. s. in spite of the removal of barriers to intra - state and inter - state banking. according to a survey conducted by the federal reserve, more than 90 % of banks ’ clientele is located within a distance of less than 20 miles of the banks ’ premises. i am convinced that the potential developments in new technologies and financial innovation will continue to exert their influence both in europe and in the unites states and may well make geographical proximity to customers less relevant. public authorities also have a role to play in promoting the appropriate regulatory and supervisory environment that enhances investors ’ confidence in cross - border financial services. the integration of securities markets given these general considerations i would like now to focus on the securities markets. i believe that perhaps more than in any other field, the trading and post - trading services in the securities industry are good examples to illustrate the scope for further integration and how we can

instruments in its discount window. the eurosystem was not forced to take such measures, since its collateral framework already foresees the acceptance of a very wide set of collateral. the eurosystem framework specifies that this very wide range of collateral is accepted for all types of eurosystem credit operations : intraday operations and monetary policy - related operations, the latter including both access to standing facilities and open market operations. the wide and unified set of collateral supports both the smoothness and systemic stability of intraday and overnight liquidity management of banks. payment systems and financial stability the global financial system has been going through a phase of major structural change, which may have several implications for payment systems and financial stability. 3 first, we have witnessed the creation of new financial instruments and products to address market and credit risk, and in principle to enhance liquidity of financial assets. at the same time, the size of the financial sector in relation to the real economy has significantly grown. this suggests that the stability of the financial system has become more important for the real economy. moreover, there has been a growing symbiosis between markets and intermediaries. while intermediaries and markets have often been seen as alternative forms of arranging financial relationships, they are increasingly complementary. indeed, intermediaries such as banks have become increasingly reliant on markets as a source of income and for their risk management, through their hedging operations. markets in turn have become increasingly dependent on intermediaries for the provision of market - making services and of funding liquidity. this structural change may have some implications for payment systems and market infrastructures, especially in periods of financial distress. one important implication is that more than ever before, the smooth functioning of the financial system is dependent on the assumption that the option to trade can be exercised even under stressed market conditions. this is a natural consequence of the development of markets and instruments which are actively traded or that are held in the expectation that, should the need arise, they could be traded. moreover, the new financial environment appears to be more reliant on the immediate availability of funding liquidity. funding liquidity is critical for the orderly execution of trades and it can become scarce at times of distress, precisely when for further details see claudio e. v. borio ( 2007 ) : change and constancy in the financial system : implications for financial distress and policy. it is most needed, as market participants cut credit lines and / or raise margin requirements