successful cmu. another reason for a limited “ cmu effect ” is that some of the agreed initiatives were only recently implemented. take the securitisation package, for example. important technical regulatory acts are still pending which prevent the new framework from being applied in full and are a source of uncertainty for those who would like to use it. it is therefore too early to assess the success of this measure. more importantly however, some proposals will not deliver their full potential. in the case of the pan - european personal pension product, the recent agreement gave birth to a rather complex product for which key elements are left to the discretion of member states. lack of ambition in the cross - border portability of the instrument may limit its capacity to facilitate labour mobility and the mobilisation of savings across borders in the absence of geographical diversification requirement for investments. this underpins the relevance of the cmu agenda for the coming years and the importance of making cmu a reality. revitalising the cmu agenda to face new challenges my second point today is that a revamped cmu agenda would help the eu to face up to new challenges. the departure of the united kingdom from the eu is undoubtedly one such challenge. as a response, cmu should continue to aim to develop and integrate the eu ’ s capital markets in a context in which capital market activities throughout europe are being reorganised. in the new post - brexit reality, we could see one or more financial centres emerge in continental europe, possibly in competition with each other, or perhaps each specialising in certain areas. cmu should facilitate this transition by creating a framework that supports the emergence of an integrated financial market and avoids a return to a fragmentation of activities. in this context, a successful cmu means that the continued expansion of the non - bank sector should be accompanied – rather than followed – by a revision of the prudential and supervisory 2 / 4 bis central bankers'speeches framework. importantly, we need to develop macroprudential policies for the non - bank sector at the system level to ensure that the system absorbs shocks, rather than amplifying exuberance and stresses. ultimately, this would warrant a discussion on a potential move towards more centralised supervision of financial markets. the recent reform of the european supervisory authorities falls short of adapting europe ’ s supervisory framework to the ambition of cmu. the review did not result in a broad revision of the powers and mandate of the esas,

? the incentive for firms to exploit economies of scale, invest and innovate – that is, to be productive – depends critically on the business environment. we therefore need to ensure we have the economic framework conditions that encourage this. this brings me to the key topic of structural reforms. put simply, there is no way we can achieve higher potential growth in the euro area without them. structural reforms are essential to raise the trend components of the inputs to production ( investment and labour ) and the efficiency with which they are used ( total factor productivity ). let me explain why. first, while investment in the euro area may pick up as the uncertainty caused by the crisis recedes, to raise trend investment there needs to be fresh opportunities for firms to develop new business models and grow. for euro area economies, the main area where that can be achieved is through addressing regulatory barriers – for example, planning laws that limit retail expansion or transport regulations that hinder cross - border projects. a recent report by a consultancy found that 45 % of fixed investment in europe was concentrated in sectors where governments have significant regulatory influence, implying that structural reforms in these areas could provide a significant boost to investment. 7 and as many investment projects benefit from returns over decades, they could be made viable with regulatory changes even in a relatively weak economy. second, given weak demographic trends in europe, raising trend labour supply is only really possible through further reform measures. we know that these can work. the increase in labour participation during the crisis has been largely driven by previous reforms to increase standard & poor ’ s, “ transition study : less than 1. 5 % of european structured finance has defaulted since mid - 2007 ”, 11 june 2013. see also moody ’ s investors service, “ structured finance rating transitions : 1983 – 2013 ”, 7 june 2013, as well as fitch ratings, “ the credit crisis four years on … structured finance research compendium ”, june 2012, and “ emea structured finance losses ”, august 2011. investing in growth : europe ’ s next challenge, mckinsey global institute, december 2012. bis central bankers ’ speeches female participation rates, as well as reforms related to early retirement and pensions that have raised the participation of older workers. the challenge now is to extend this activism to groups that have suffered during the crisis, in particular younger people and the low skilled. key measures here include reducing labour market duality and shifting from passive labour market policies, such as unemployment benefits de - linked from incentives