markets can strengthen financial stability by increasing private risk sharing, thereby facilitating the absorption of shocks throughout the eu. at the same time, well - functioning capital markets facilitate the transmission of our monetary policy. financial integration therefore features prominently in the eurosystem ’ s mission statement. cmu is also an agenda for an increase in the diversity and size of capital markets through the further development of certain market segments. deeper and more diverse capital markets provide alternative sources of funding. for example, financing tools could be developed to better account for the specific needs of small and medium - sized enterprises, infrastructure projects or long - term financing. moreover, the reduction of the economy ’ s dependence on bank financing would widen the set of tools available for the conduct of monetary policy. however, there is a real danger of failing to explicitly identify the necessary conditions for the cmu to achieve its objectives. let ’ s be clear : a genuine cmu means achieving a high level of financial integration in completing the single market in this area. in a genuine cmu, all market participants with the same relevant characteristics should face a single set of rules, have equal access to a set of financial instruments or services, and be treated equally when they are active in the market. the eu ’ s capital markets union therefore needs to be underpinned by a single legal and regulatory framework that provides a level playing field and allows markets to integrate and develop. this has a number of implications. first, the goal of having such a capital markets union is in itself very ambitious. hoping that cmu will bring the expected benefits without accepting the prospect of full regulatory harmonisation is wishful thinking. getting halfway there will not be enough. in fact, half a capital markets union is still no capital markets union. this was one of the lessons of the crisis, in particular regarding the interplay between the single market and an incomplete regulatory and supervisory framework for banks. there is no reason to doubt that what holds for banking also applies to capital markets. second, developing a genuine single rulebook for capital markets would also mean addressing barriers in policy areas that are relevant beyond capital. these include politically sensitive areas such as insolvency and corporate laws as well as taxation of financial products. where legislative progress is for the moment not possible at the eu level, we need determined and concerted action at the national level to lower cross - border barriers. third, the single rulebook would also need to be complemented over time by the common implementation and enforcement of

rules as the deeper interconnectedness generated by cmu increases risks of contagion and consequently requires enhanced oversight and supervision of markets and institutions. the european parliament as co - legislator has a pivotal role to play in this process, and i trust that it will be a key contributor to the creation of a genuine cmu. bis central bankers ’ speeches conclusion let me conclude. the major efforts undertaken since the beginning of 2014 as regards both monetary policy and the banking union demonstrate that europe can deliver when determined action is needed. nevertheless, we need to go further. sound fiscal and structural policies at the national level and further steps to reinforce the institutional underpinning of economic and monetary union would allow the euro area economy to become more resilient. moreover, decisive actions and reforms are needed to support the creation of a genuine capital markets union with a view to unleashing the full benefits of more robust financial integration. these developments will play a key role in paving the way to a sustained recovery and a stronger monetary union, resilient to shocks and a guarantee of stability and prosperity. bis central bankers ’ speeches