benoit cœure : triparty settlement interoperability speech by mr benoit cœure, member of the executive board of the european central bank, at the signing ceremony for the memorandum of understanding on triparty settlement interoperability, frankfurt am main, 15 july 2013. * * * ladies and gentlemen, it is a great pleasure to host today at the ecb, the signing ceremony for the memorandum of understanding on triparty settlement interoperability, and to be together with key representatives from the european repo council ( erc ), and the repo market infrastructures who have worked together on this initiative for many years now. i have seen in the memorandum of understanding that triparty settlement interoperability is conveniently abbreviated to “ tsi ” so i will take advantage of this shorter form in my remarks today. the aim of the “ tsi initiative ”, as you are all well aware, is to bring together borrowers and lenders, regardless of where the underlying liquidity or collateral is held, thereby avoiding the build - up of silos in the market. in order to place the tsi initiative in context, let us reflect for a moment on the european repo market, which has grown significantly since the beginning of the financial crisis. as you are all aware, the repo market plays a vital role in the financial system, as a source of funding and more generally, for the provision of market liquidity. the euro repo market is particularly large and has increased significantly in importance in recent years. after an initial slowdown in interbank repos at the onset of the financial crisis, icma erc surveys have shown the value of euro area repos increase significantly from 4. 6 trillion eur in 2008 to 5. 6 trillion eur by the end of 2012. in the context of these figures, the importance of tsi to further improving the efficient working of the repo market can be clearly seen. i am extremely pleased that so much progress has been achieved on the tsi over the last few months because it is an initiative that has been strongly supported by the eurosystem over the years, and in particular through the ecb contact group on euro securities infrastructures, cogesi. indeed, in a workshop later today, we will discuss a report on collateral eligibility requirements prepared by cogesi ( and to which i understand a number of persons in this room have contributed ) – and we will see that the tsi initiative can help

, such risks need to be addressed by policy instruments dedicated to ensuring resilience while curbing cyclical excesses – that is, supervision and macroprudential policy. in the current situation, we see that risks stemming from excessive risk - taking or any misaligned asset prices are contained in the euro area. this assessment is supported by continued moderate private sector credit expansion and leverage. however, we have certainly noticed that equity prices have continued to rise – albeit from previously low levels – and that sovereign bond yields are historically low. moreover, ecb estimates suggest that corporate bond risk premia are moving towards levels seen before the financial crisis. in addition, co - movements in financial markets have increased since summer 2014. these developments justify the need for close monitoring with a particular focus on asset markets but also on banks, insurers and pension funds as well as the less - regulated nonbank financial sector and the non - financial private sector. as financial and business cycles are not always aligned across countries and sectors in the euro area, area - wide monetary policy needs to be complemented by more targeted macroprudential policy. unlike monetary policy that influences the euro area across the board, macroprudential policy instruments can be applied in a granular manner, addressing risks at the country, sector and institutional level. macroprudential policy therefore provides the most appropriate instruments for mitigating financial stability risks, thereby supporting the price - stability oriented monetary policy. in that respect, concerns about the stability of the banking system have been addressed over recent years, through efforts to put a comprehensive regulatory framework in place and notably the set - up of banking supervision at the european level with the establishment of the single supervisory mechanism ( ssm ). the regulatory framework for banks is at this stage largely in place. but a few important elements such as leverage ratio, the net stable funding ratio ( nsfr ) and total loss absorbing capacity ( tlac ), which should be finalised in order to complete our framework for banks, are outstanding. in addition, macroprudential tools for the banking sector are also available but should be extended to also encompass ltv ( loanto - value ) and dti ratios ( debt - to - income ), the leverage ratio, limits to specific large exposures to shadow banks and to maturity transformation. given the achievements in the regulatory framework for banks and the changing landscape in the euro area financial system, our attention naturally shifts to the more opaque and less regulated parts