##ness of european banks at the international level. the other major initiative at the european level to strengthen financial integration is the capital markets union project which aims to boost investment in the eu. speeding up this union will not only foster growth but will also enhance risk - sharing across european countries and mitigate the procyclicality of bank financing. we, at the banque of france, support in particular three initiatives which should have a decisive impact on cross - border investment : first, the harmonisation of the insolvency procedures framework and its implementation by companies to promote investment in equity across europe. second, the development of pan - european individual retirement savings products to increase workers ’ mobility and offer a new source of long - term financing for european companies. third, the reinforcement of esma which is necessary to supervise capital markets in a harmonised way, while duly involving national authorities when appropriate. completing the banking union and accelerating the capital markets union will therefore be essential in order to lay the basis for a sound, diversified and integrated financial intermediation. yet, we should go even further and achieve a real “ financial eurosystem ”, made up of stronger and pan - european financial institutions and shared market infrastructures. brexit, in this sense, represents an opportunity. let ’ s be clear : there will not be a single city for the continent, but rather an integrated polycentric network of financial centres, with specialisations based on areas of expertise. our ability to adequately regulate and supervise these changes in financial intermediation will be determinant for growth and innovation. europe must effectively transform its own savings, in order to enhance its ability to finance the real economy. this is what governor villeroy de galhau calls the financing union for investment and innovation. this involves better steering the euro area ’ s abundant savings to absorb shocks within the euro area more effectively and 8 / 9 to meet investment and innovation needs in fields such as digital technology, energy transition and the equity financing of smes. i would like to conclude my speech by quoting bill gates : “ we always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. don ’ t let yourself be lulled into inaction ”. 3 the banque de france tries to heed this warning. although we do belong to the ( very ) “ old world ” – the banque de france was created more than 200 years ago by

amse | aix - marseille school of economics marseille, 11 december 2018 speech by denis beau first deputy governor “ trends in financial intermediation and implications for the regulation and supervision of the european financial sector ” 1 / 9 ladies and gentlemen, dear students, it ’ s a pleasure to be at the aix - marseille school of economics today to discuss the trends affecting a key channel of the financing of the real economy : financial intermediation. this topic is well chosen the year of the tenth anniversary of both lehman bankruptcy and nakamoto ’ s paper underlying the bitcoin. this is not just a coincidence. for crypto - assets ’ proponents, the “ old world ” of bank - centric financial intermediation failed in 2008 and had to be replaced by disintermediated peer - to - peer systems like bitcoin. where do we stand now? central bankers, regulators and supervisors have worked to strengthen the traditional bank centric model of intermediation, and the highly intensive finalisation of basel iii has concluded ten years of regulatory efforts in that field. banks are stronger and more resilient than before 2008. at the same time, quite ironically, the bitcoin itself has generated the biggest bubble ever, which is now bursting. so, in 2018, are there new developments in financial intermediation? yes, indeed. a number of factors contribute to push the european bank - centric model towards a more diversified, unbundled financial intermediation model. hence, i will focus the first part of my presentation on those drivers and their impact on financial intermediation ( i ). i will then highlight the financial risks that go hand - in - hand with the changes underway ( ii ). finally, i would like to emphasise that a safe move towards a more diversified intermediation model as we see it developing cannot be achieved without further financial integration at european level. to that end, advancing the european regulatory agenda is of prime importance ( iii ). 1. from bank - centric financial intermediation towards unbundled financial intermediation in the digital era to date, in europe, we have been accustomed to a bank - centric intermediation model. however, this model is being increasingly challenged by new players emerging in the digital era, the so - called fintechs and bigtechs, as well as by the growing weight of the asset management industry. we thus need to prepare to new intermediation models,