where market - based financing prevails, euro area non - financial corporations have traditionally relied mostly on banks to finance their activities. this has undertaken a dramatic change, as non - bank financing sources have become much more important since the onset of the financial crisis. total assets of investment funds in percentage of total bank assets increased from 16 % in 2007 to 44 % last year. the percentage of bank loans in the total stock of firms ’ external financing in 2017 was just above 12 % ( or 15 %, if intra - company loans and trade credit are excluded from total external financing ). for the same year, if only the stock of debt instruments is considered ( excluding equity sources ), bank loans represented only 28 % of total debt financing ( or 45 %, if net of intrasectoral financing ). before the crisis, back in 2007, bank loans represented 37 % of total debt financing ( or 60 %, if net of intra - sectoral financing ). 1 see the annual report, box n. 4, page 36 the monetary policy measures taken since mid - 2014 have had a decisive impact on bank - based transmission : our estimates suggest that the annual growth in loans to non - financial corporations would have been roughly half as strong today without our measures. they have notably freed up balance sheet capacity, enabling banks to step up their lending to firms with limited access to bond - based financing. moreover, our measures have increased the share of non - bank financing sources in the funding of euro area companies, particularly through the corporate sector purchase programme. this programme has encouraged corporate issuance volumes and contributed to lowering corporate bond yields. reduced funding costs and better access to finance, for both small and large companies, are crucial for more investment. and more diverse sources of funding for the private sector can boost economic resilience. my second point is that the transmission of the ecb ’ s monetary policy benefits from a safe and sound financial sector. let me therefore turn to current financial stability risks and macroprudential policies in the euro area before elaborating on the necessary regulatory reforms. the financial stability situation in the euro area evolved positively during 2017, supported by improving economic conditions. nevertheless, four main risks persisted which continue to be closely monitored at present. first, the risk of a sudden and sizeable reversal in risk premia in global financial markets remained pronounced as the search for yield continued in 2017. second, 2 / 4 bis central bankers'speeches euro area banks continued to face challenging

and improving insolvency frameworks. second, by conducting regular reviews of progress towards reducing non - performing loans. third, by suppressing unwarranted national options and discretions, as the ecb has been calling for since the inception of european banking supervision. i also think that the conditions for agreeing on the european stability mechanism as the solvency and liquidity backstop for the single resolution fund are now within reach. it should be operationalised as soon as possible in order to increase the overall credibility of the resolution framework. turning to the non - banking sector, it is essential that its prudential framework be adapted to reflect its increasing role in financial stability and in the real economy. in this regard, i welcome the commission ’ s proposal that large investment firms carrying out bank - like activities be considered credit institutions and be subject to european banking supervision. ensuring a growth - supporting financial sector while the financial sector needs to be regulated to prevent it from causing instability and hampering the transmission of our monetary policy, it can also support growth. since the late 1990s, we have seen a marked slowdown in the growth of labour productivity and a corresponding reduction in estimates of potential growth amounting to approximately one percentage point. some evidence attributes the slowdown to greater dispersion of productivity between frontier and laggard firms, capital misallocation and lower business dynamism. 3 / 4 bis central bankers'speeches similarly, in addition to a healthy banking sector, well - functioning, diversified and deeply integrated eu capital markets can contribute to boost growth. this is why the ecb has been a strong supporter of the capital markets union project since its inception. by diversifying the funding sources of european non - financial corporations, thereby enhancing the smooth transmission of monetary policy, the capital markets union is an essential complement to the banking union. i thus call on all stakeholders to step up their efforts towards achieving a genuine capital markets union. conclusion let me conclude. one of the key lessons from the crisis was that the ecb ’ s monetary policy measures and the policies needed to address challenges in the financial sector were complementary. more efficient and stable banking and financial markets will further improve the efficiency of monetary policy transmission channels and thus support the ecb ’ s policies in the coming years. it is therefore essential that we make further progress on the banking union and capital markets union. in order to achieve this, i trust that the strong relationship between the european parliament and the ecb, to which i