yves mersch : comments at financial services summit comments by mr yves mersch, member of the executive board of the european central bank, at cumberland lodge financial services summit, windsor, 10 november 2016. * * * introduction sustainable economic growth in the real economy depends on the soundness of financial services and their providers ; this simple truth has been amply evidenced by the collapse of credit during the financial crisis and the subsequent recession. one important type of financial intermediary are central counterparties ( ccps ) ; second, the financial ecosystem is – like the rest of the world – experiencing rapid change due to technical innovation ; i would like to give a clear signal that innovation should be embraced as the improvement of financial services can boost the real economy ; but i also would like to give a warning that a certain level of caution is needed when technological innovations are applied to financial markets in order to avoid any negative consequences. ( i ) central counterparties ccps are systemically relevant. they have been in the focus of regulators and central banks since the financial crisis. the growth in central clearing makes ccps nodes for risk in the system. this is why we have carried out considerable work at international level to promote that they operate in a safe and resilient manner. in 2012 global standard setting bodies ( cpmi - iosco ) adopted key risk mitigation requirements – the principles for financial market infrastructures – which raised the bar worldwide for ccp supervision. a global ccp work plan has recently been launched to further strengthen the resilience, recovery planning and resolution of ccps, which will lead to further guidance being released in the near future. under eu law, each ccp is overseen by a college of supervisors, involving all authorities that have a relevant interest in its prudent risk management. the colleges act as forums for information - sharing, ensuring a high level of transparency in the way ccps operate, which can prove especially valuable in the event of a crisis. brexit creates uncertainty, and raises doubts as to the future of this framework the prospect of the uk ’ s exit from the eu creates uncertainty regarding the future of the supervision of non - euro area ccps that clear significant amounts of euro currency. we do not know what the future relationship between the eu and the uk will be, and i do not wish to speculate on this matter. we cannot be complacent with regard to the regulatory, supervisory and oversight framework for financial market infrastructures. while it

address potential banking crises. fourth and finally, there should be a single deposit guarantee scheme in order to harmonise and centralise deposit insurance. iv. 3. assessing the project obviously, each pillar has its own pros and cons. let me mention the most important ones. as concerns the single rulebook, the financial crisis highlighted the danger of divergent national rules. the current context justifies the adoption of a common legal framework for banking regulation. the european banking authority would play the central role in elaborating the rulebook. the result will be ( i ) less regulatory arbitrage ; ( ii ) a reinforcement of the competitive neutrality principle : same business, same risk, same rules ; and ( iii ) a higher level of transparency, contributing to a robust and uniform regulatory framework in the single market. on the other hand, there are some risks : ( i ) implementing the same rulebook across over 8, 000 banks in 17 or more countries may not prove flexible enough ; ( ii ) the tougher regulations currently in place at national level might be undermined in those non - euro area member states which decide not to join the banking union. local subsidiaries may choose to bypass the more prohibitive banking legislation by turning into branches. the single supervisory mechanism could be created through the transfer of prudential supervision attributes from national authorities to the ecb. in this context, a number of tasks such as consumer protection, fight against money laundering and supervision of banks based in non - eu countries remain at the national level. meanwhile, the ecb takes the actual responsibility for supervising the banking system, being in charge of licensing credit institutions, ensuring compliance with capital, leverage and liquidity requirements and also supervising financial conglomerates on a consolidated basis. a gradual timetable was designed to smooth the transition to the new mechanism. starting from 1 january 2013, the ecb may choose to take over the supervision of any credit institution in the banking union. a particular focus will be on the entities which have received or requested public funding. by 1 january 2014, all other banks should be under central supervision, with an earlier cut - off date ( 1 july 2013 ) for banks of major systemic importance. the successful implementation of the mechanism would hold considerable weight in restoring confidence and increasing transparency in banking supervision. however, a couple of downsides are worth mentioning : ( i ) voluntary participation of non - euro states in the banking union may result in the fragmentation of the eu single market into participating and non -