april 2016 ), “ special feature a – financial integration and risk - sharing in a monetary union ”, financial integration in europe. bis central bankers ’ speeches “ financial integration coin ”. this explains why taking a macroprudential perspective on the financial system, is extremely important for addressing potential new sources of systemic risks. in the first place, the role of the european securities and markets authority ( esma ) in coordinating with national authorities the effective harmonised implementation of all legislation relevant for cmu has to be strengthened. we need a single rule book for capital markets the same way it is being established for the banking sector. at the same time, the further development of capital markets increases competition for the banking sector and incentivises banks to take on more risk to sustain profitability. 13, 14 to ensure that there are no unintended financial stability risks, we need to strengthen the european macroprudential regulatory toolkit for banks under the crdiv / crr. 15 moreover, the growth of market - based financing is accompanied by the strong growth of non - bank financing that creates new risks. over the past few years, growth in total euro area financial assets has been primarily driven by non - bank financial entities, investment funds in particular. the low interest rate environment has also played a role in this growth, with increasing amounts of capital being allocated to investment funds in the search for yield. between end - 2009 and the first quarter of 2015, assets managed by investment funds other than money market funds almost doubled from eur 5. 4 trillion to eur 10. 5 trillion. 16 importantly, this rapid growth comes along with increased risk - taking. 17 in addition, the interconnectedness of the fund sector with the wider financial system, more widespread use of synthetic leverage and the increasing prevalence of demandable equity imply that potential for a systemic impact is increasing, should the investment fund industry come under stress. in short, financial stability risks increasingly extend beyond traditional entities such as banks and insurers. this underlines the necessity of developing the macroprudential framework beyond banking. developing the macroprudential framework beyond banking let me elaborate on three important aspects of this task. first, we need to develop a framework to better control the leverage of alternative investment funds in the european union. given that the use of leverage by investment funds could create and amplify systemic risk, it is important that we ensure that leverage remains within acceptable limits. second, we need to develop

##ing benign economic adjustment so that the euro area realises the many benefits associated with globalisation. of course, policy challenges do not stop here – notably, greater microeconomic flexibility would also be essential to both allow our economy to take better advantage of the opportunities provided by globalisation, but would also facilitate macroeconomic adjustment in the wake of shocks and improve the resilience of the economy. at the international level, looking at the implications for the governance of globalisation, i believe that a key contribution that the institutions and informal bodies and forums in charge of global economic and financial stability make to strengthen the resilience of the global financial system is to foster information - sharing and increase transparency. it is the access to information that facilitates investment decisions, the management of risk and market discipline. these effects are of course particularly important in times of market volatility as they lessen herding behaviour and contagion. moreover, with the global economic and financial landscape constantly changing, it is essential to establish market - based policy frameworks and to pursue sound domestic policies, while regularly updating the various institutions and forums that form the international financial architecture. this relates both to the format of these institutions and forums as well as to the policy issues that they deal with. doing so ensures that the benefits stemming from the process of globalisation are maximised. as i have set out earlier, policymakers are not complacent : they do live up to this important task and adapt the international financial architecture where necessary, thereby bolstering the shock - absorbing capacity of the global financial system. i thank you for your attention.