benoit coeure : interview in phileleftheros interview with mr benoit coeure, member of the executive board of the european central bank, in phileleftheros, conducted by mr theano theiopoulou on 9 november 2014. * * * 1. why was banks ’ participation in the ecb ’ s targeted longer - term refinancing operations ( tltros ) lower than expected? there are many reasons, including the disclosure of our comprehensive assessment of euro area banks in october, for which reason they may have preferred to postpone their borrowing to december. having said this, the september outcome falls within the range of take - up values we had expected, based on banks ’ behaviour under previous programmes. 2. the volume of non - performing loans in cyprus is one of the highest in the euro area. moreover, lending to small and medium - sized enterprises ( smes ) entails higher risk weights and, consequently, capital surcharges. how could banks contribute to growth if lending is limited? household and corporate indebtedness in cyprus is among the highest in the euro area. the cost of risk remains elevated despite some recent improvements. in these circumstances, deleveraging is a natural phenomenon. nonetheless, banks should make good use of the available lending opportunities and support viable borrowers. the comprehensive assessment has confirmed that, on aggregate, the banking sector is adequately equipped with capital and that constraints on lending arising from the situation of banks are becoming less significant, both in cyprus and the rest of the euro area. 3. by becoming the supervisor of euro area banks, is the ecb able to completely eliminate the risk of financial crises in the future? the assumption by the ecb of the responsibility for the supervision of euro area banks last tuesday marked an important step in european economic and financial integration, probably the most important one since the introduction of the euro. it is a sharing of sovereignty but also a gain of sovereignty : for example, the cypriot member of the supervisory board of the ecb will now have a say in the supervision of large euro area banks. supervisory standards will be harmonised as the ecb ’ s banking supervision will draw on the best practices of the participating countries, and the ecb will draw on the information gathered in the comprehensive assessment to improve its supervision and foster convergence. besides, the single resolution mechanism and the bank recovery and resolution directive, with its new rules for dealing with banking crises entering into force in 2016, will

32 per cent in 2011. the rising living standards across the region have been a by - product of remarkable economic and institutional transformation, which has shaken off the heavy burden of half a century of central planning. 2. offering a platform for the integration into the global economy the second good experience i would like to highlight is the global success of pan - european production chains. this can be a win - win story for everybody in our continent. exports from central and eastern europe grew at an average pace of over 10 per cent per year in the decade prior to the global financial crisis. even thereafter, in many of these countries export growth has been led by significant competitiveness gains. bis central bankers ’ speeches this export performance can to a large extent be attributed to the integration of local exporters into cross - border production chains, which at present account for half of all of their exports. what this means in practice is that local exporters typically use components sourced from the euro area to assemble intermediate goods and final products that are then sent down the value chain en route to final consumers around the globe. local exporters are often owned outright or operated as joint ventures by companies based in the euro area. in fact, more than two out of three euros invested in central and eastern europe come from the euro area. the win - win proposition of vertical specialisation in international trade is most visible in the european automobile industry. a recent imf report highlights the fact that the german automobile industry embrace of this trend has allowed it to remain a leading producer and exporter of passenger cars with a global market share of around 20 per cent as of 2012. while domestic production has remained relatively constant at around 5. 5 million vehicles per year between 1992 and 2011, foreign production, particularly in czech republic, hungary, poland and slovakia, increased more than threefold, reaching 7. 1 million vehicles. another example is that of renault, which became the majority stakeholder in the romanian automobile firm dacia in 1999. in the space of a few years, renault turned the ailing company into a driving force for the renault group. specializing in robust, economical models, dacia produces vehicles primarily for new markets. a remarkable aspect of this production model is that, while real linkages with the euro area remain substantial, the economic prospects of countries in the region have become relatively less dependent on euro area than on world demand. i was indeed surprised when i learned that the share of central and eastern european exports destined to the euro area peaked already