in 2018 – 2019, even though it has already been largely factored in by markets and banking institutions. but regulation is still under development for the rest of the financial system. pressures increase from regulated entities, which complain about regulatory uncertainty, and from policy - makers, who are keen to foster economic recovery and growth after 8 years of low economic performances almost a lost decade! keeping the momentum relates to three objectives : – complete the regulatory agenda, in particular regarding what is named now as “ market - based finance ”, so as to effectively and comprehensively strengthen the financial system and remove regulatory uncertainty ; – make sure that the regulatory spectrum expands well beyond the sole banking sector so as to avoid unfair level playing field, regulatory arbitrage and a paradoxical outcome that is favoring and encouraging those who are still “ in the shadows. ” on top of that, keeping pace with the creativity of all players is no small challenge. bis central bankers ’ speeches – devoting adequate resources and designing the proper organization of supervision which needs to be intrusive. preserving diversity while the objective of expanding the scope of regulation beyond the banking sector may require applying similar – though not identical - regulation to similar asset classes or risks, irrespective of the legal status of the intermediary bearing them, it must also be acknowledged that business models, accounting frameworks, liability structures, time horizons of decisions may differ across sectors and entities. in that respect, it can be argued that that “ one size does not necessarily fit all ” and that one should preserve and ensure diversity. this is especially the case in the financial system, where identical behaviors at the same critical moments, possibly due to identical regulations, may generate endogenous risk and amplification as in professor shin ’ s millennium bridge analogy. this reasoning applies not only to financial intermediaries but also to financial market infrastructures, where networks effects through interlinked central counterparties might actually amplify shocks. keeping a systemic eye of financial intermediaries means that one should not look at them in isolation but rather consider both how their behaviors can propagate systemic risk in the financial system and how their failure can disrupt the provision of critical financial services to the real economy. 3. increasing global robustness this latter point brings me to the issue of recovery and resolution of both financial intermediaries and market infrastructures. this is probably the key novelty in the regulatory framework that is emerging from the crisis. it serves both the objectives of preventing disorder

moving towards the banking and financial union that was missing from monetary union. 3. the eurosystem is providing valuable support during this period of necessary reforms it is clear that the ultimate responsibility for exiting the crisis lies with governments, at national level – implementing reforms, consolidating public finances and restoring competitiveness – and at the collective level – agreeing on and implementing a more coherent and comprehensive institutional framework around monetary union. these reforms are obviously – and fortunately – the fruit of a democratic process and can only be that. but bis central bankers ’ speeches the corollary to this is that these necessary reforms cannot be immediate : they take time, first to be implemented and then to yield their effects. and the time of the markets is not that of democracy, as you know. doubts and delays create nervousness, volatility and worry in financial markets, which often leads to sharp rises in interest rates for countries deemed to be vulnerable. the eurosystem has decided to take firm action when it considers that these interest rates do not reflect a genuine credit risk differential, but rather unfounded fears about the reversibility of the euro. because at that point, the effectiveness of the single monetary policy is clearly jeopardised : the key interest rates that we set no longer feed through to the real economy in the same way in all countries via the bank lending channel – which is a crucial channel in the euro area given the predominance of intermediated financing. in order to fulfil our mandate of maintaining price stability, our monetary policy impulses need to be transmitted homogeneously across the whole area. this is why we decided to create a new instrument : outright monetary transactions. the idea is to have a credible backstop to counter unjustified increases in sovereign yields. this backstop must naturally be accompanied by strict conditionality to guarantee that the country concerned makes effective progress towards a more robust economic situation. by means of this new tool, as with all of the other tools that we have deployed since the start of the crisis – in particular the measures to support bank liquidity – the eurosystem is endeavouring to relieve the pressure from the markets which may undermine the ability of countries to implement the reforms embarked on, and which may eventually jeopardise price stability. we shall continue to take all of the necessary action to fulfil our mandate and contribute, within this framework, to the success of this tricky but necessary period of transition towards a more coherent, stable and