to move to more innovative sectors. successful examples of such measures have been introduced in spain, ireland and other reforming countries. the process of private sector debt workout is also advancing. the ecb ’ s comprehensive assessment has accelerated the crucial step of acknowledging and provisioning for npls. what is now key is that, where necessary, those npls are further restructured through more efficient insolvency proceedings or removed from banks ’ balance sheets altogether. several countries have taken national initiatives to improve in - and out - of - court restructuring frameworks and establish asset management companies for npls. this could be supported at the european level by progressing with capital markets union, which should induce greater legal convergence and deepen markets for distressed debt. supporting the deleveraging process in these ways – by raising real growth and working out private debt – would provide further momentum to the recovery, while raising confidence in long - term growth prospects. but importantly, balance sheet repair also creates the preconditions to address definitively one of the euro area ’ s key institutional weaknesses : the incomplete banking union. a great deal of progress has been made in this area in recent years. with the single supervisory mechanism we now have a system of supervision that is less liable to capture or forbearance. the bank recovery and resolution directive provides a harmonised and predictable framework for private sector risk - sharing across the union. and governments are on the way to establishing a european public backstop for the single resolution mechanism. but if we are to complete banking union – notably in terms the backstop to the srm and establishing a common deposit guarantee scheme – legacy assets need first to be fully addressed. that is why balance sheet repair is pivotal. completing banking union also requires removing any remnants of the regulatory framework that implicitly support home bias. for example, how much national discretion is allowed in implementing rules ; how fungible are liquidity and capital across borders ; how regulations, such as those on loss - absorbing capital, affect the choice of subsidiaries versus branches – all these decisions will crucially shape the microeconomic incentives of banks to become european. and the macroeconomic consequences for the union are significant. conclusion to conclude, working through the aftermath of a financial cycle requires a comprehensive response. monetary policy will play its part for as long as needed, which means the full implementation of the asset purchase programme and, if necessary, adjustments to its size, composition and duration. and by meeting our objective, we support growth and inflation,

yves mersch : means of payments and smes – where are we heading? speech by mr yves mersch, member of the executive board of the european central bank, at the dinner debate, organised by the think tank etienne marcel, paris, 29 september 2015. * 1. * * introduction mr cohen - hadad, ( mr president ) ladies and gentlemen, no economy can prosper without healthy, competitive and flourishing small and mediumsized enterprises ( smes ). they are the foundation on which the european economy is built and constitute more than 99 % of all firms in the euro area. they employ more than two - thirds of the workforce and generate around 60 % of value added. according to recent research, smes accounted for around 85 % of total employment growth between 2002 and 2010 and have much higher employment growth rates than large enterprises. the financial crisis hit the financing of smes particularly hard. this explains why, in recent years, the ecb and the european commission have strongly emphasised measures that support both bank and non - bank financing of the european sme sector. these measures and policy initiatives include strengthening bank financing by facilitating longer - term financing and promoting healthier balance sheets. they also aim to diversify into non - bank financing via more efficient securitisation, better transparency and more efficient wholesale infrastructure. 1 this is why the ecb strongly supports the european commission ’ s initiative to establish a european capital markets union, which will allow businesses to enjoy a greater range of funding choices and help reduce the link between a firm ’ s location and its funding costs. however, there are other policies that have received less public attention in relation to the competitiveness of the european sme sector, one of the most important being integration and innovation in the retail payments market, particularly for payments in euro. this is what i will focus on tonight. 2. past achievements over the past years the public and private sectors have worked together to create the single euro payments area ( sepa ). regulatory measures and market developments have combined to remove the distinction between domestic and cross - border payments in euro. retail payments have become much faster, cheaper and more secure. instead of taking three to five days, euro credit transfers and direct debits are now executed within one business day, not only at the domestic level but also across borders. fees for cross - border euro transactions decreased to the same level as those for domestic transactions. last, but certainly not least, payments in general have become more