encompassing reforms to european capital markets are needed to promote integration, strengthen investment and boost private risk sharing. the united kingdom ’ s departure from the eu reinforces the urgency with which we should pursue policies that address barriers to capital market integration in europe and eliminate opportunities for regulatory arbitrage. more integrated capital markets will support the transmission of the single monetary policy and increase its resilience in periods of stress. advancing cmu should therefore be a top priority for the new european commission and parliament. thank you. 1 see fsb ( 2019 ), fsb report on market fragmentation, 4 june. 2 see houston, j., lin, c. and ma, y. ( 2012 ), “ regulatory arbitrage and international bank flows ”, journal of finance, no 67, pp. 1845 – 1895 ; and ongena, s., popov, a. and udell, g. ( 2013 ), “ ‘ when the cat ’ s away the mice will play ’ : does regulation at home affect bank risk taking abroad? ”, journal of financial economics, no 108, pp. 727 – 750. 3 see cœure, b. ( 2019 ), “ heterogeneity and the ecb ’ s monetary policy ”, speech at the banque de france symposium & 34th suerf colloquium on the occasion of the 20th anniversary of the euro on “ the euro area : staying the course through uncertainties ”, paris, 29 march. 4 see also cœure, b. ( 2018 ), “ the euro area ’ s three lines of defence ”, speech at the conference “ deepening of emu ”, ljubljana, 2 february. 5 see cœure, b. ( 2019 ), “ the euro ’ s global role in a changing world : a monetary policy perspective ”, speech at the council on foreign relations, new york city, 15 february. 7 / 8 bis central bankers'speeches 6 see ecb ( 2016 ), “ trends in the external financing structure of euro area non - financial corporations ”, economic bulletin, issue 5. 7 there is mounting evidence, however, that large banking systems are associated with more systemic risk and lower economic growth, in particular as countries grow richer. see langfield, s. and pagano, m. ( 2016 ), “ bank bias in europe : effects on systemic risk and growth ”, economic policy, vol. 31, no 85, pp. 51 – 106

and investments. how do you see this controversy? part of the explanation has to do with the weakness of aggregate demand not only in slovenia but also across the euro area. slovenia is a very open economy, selling a lot to european markets. the overall weakness of growth in the euro area also weighs on slovenia. now, it is true that the low level of ecb rates today translates very slowly to the real economy. this is happening in many countries and it is not specific to slovenia. it will improve over time as we see convergence in the euro area and as we see reforms being implemented in the countries. and this you can already see taking place in slovenia in the decrease in yields on the sovereign bond market. there has been a significant improvement in the long - term interest rates on bond markets. slovenia is one of the best performers in the euro area in terms of decreasing bond yields, so that ’ s a sign that convergence is taking place. it takes time to feed into the real economy but it will happen ; things are going in the right direction. what should be the main priorities for the slovenian government and banka slovenije to boost economic growth and improve lending to companies? are there any keynesian recipes for fostering growth which you could recommend to us? i think the priority currently is not really the keynesian one. in slovenia, the priority is to make the economy more efficient, both in the private sector and in the public sector. this also means that some companies should be moved from the public sector to the private sector through privatisation. this will happen and it will also benefit the debt level. some enterprises will remain in the public sector – but their efficiency must also be improved. all the efforts that are being made today by the government and by banka slovenije to restore the soundness of the banking system are not going to achieve their goals, meaning to support growth and employment, if the economy does not work better. it is good to inject capital into banks, but if banks are facing projects that are not profitable they will be creating bad loans and make losses and the capital will be burnt. so it is very important that, alongside the restructuring and recapitalisation of banks, efforts are made to restructure the economy and to make it more profitable. that is also the recommendation of the european commission to all countries and in particular to slovenia in the so - called macroeconomic imbalance procedure. it is important that this is respected