from the balance sheet of the originating bank and credit risk is transferred to the holders of the abs. this so - called originate - and - distribute business model of banking has come under severe criticism in the course of the crisis. covered bonds are crucially different as the credit risk remains with the issuing bank, preserving the incentives for prudent risk monitoring. the term auction facility ( taf ) and the primary dealers credit facility ( pdcf ) served to broaden access to cb facilities, as before the crisis regular open market operations had been conducted with 20 investment banks, the primary dealers, only. basically treasury bills and bonds. when this proved too restrictive, both created swap facilities where banks could exchange previously ineligible securities, e. g. corporate bonds, against government securities ( fleming et al. 2009 ). in the euro area such programs were not necessary, as the eurosystem already accepted a wide range of publicly and privately issued assets. to sum up, the different measures often reflected different starting points. overall, operational frameworks converged in many dimensions towards the ecb standard. 7 2. 4. 2. structural differences between the us and the ea financial systems turning to the more downstream segments of the transmission channel, policies differed again. here the main reason lies in the profound differences how households and in particular firms are financed in the euro area and in the us. the euro area economy is to a large degree financed through banks. bank financing accounts for 145 % of gdp in the euro area while only slightly above 60 % in the us. in the us, market - based funding sources like shares and bonds amount to more than 300 % of gdp, more than double the share in the euro area ( ecb 2009a ). the importance of banks is underscored by the key role played by small and medium - sized enterprises ( smes ) in the euro area. typically these are too small to access financial markets. while in recent months some large companies have switched from bank to market based finance to circumvent bottlenecks in bank financing, smes are excluded from this alternative funding source. a second structural difference that influenced the design of the policy response is the relative importance of housing for the us economy, both in general as well as in the current crisis. in the us declining house prices have been the trigger for the crisis and have been an important drag on household balance sheets and consumption. in europe, housing has played a much more minor role. figure 3

, let me point out that the structure of the five presidents ’ report varies slightly from that of the preceding four presidents ’ report, published during the height of the crisis in 2012 by the same institutions except for the european parliament. in that report, the four pillars of genuine emu were listed in the following order : a banking union followed by a fiscal, an economic and a political union. there may be political economy considerations behind the fact that the five presidents prioritize economic union, as buoyant economic activity facilitates the implementation of ambitious reforms. apparently, the renewed dip in economic activity observable since 2013 has hampered european citizens ’ appetite for further deepening of emu and indeed strengthened disintegrative forces across the eu. moreover, the progress made in recent years in the fields of banking and fiscal union may justify their “ downgrading ” in the current report. bis central bankers ’ speeches the workshop builds on our conviction that such a comprehensive framework deserves academic scrutiny from various disciplines and a broad public debate. without anticipating the outcome of this workshop, let me just make some personal comments on the issues at stake. i would like to start with some reflection on monetary union – a fifth pillar the five presidents implicitly seem to take for granted. in the run - up to the crisis, the question was raised whether a one - size monetary policy can fit all, as some countries were enjoying an economic boom while others were still struggling against economic contraction. this uniformity of monetary policy should not be overstated at the current juncture ; however, as almost all euro area economies still have a negative output gap. but sooner or later, some countries will be forced to adopt fiscal, macroprudential or structural policies that counteract a monetary policy stance that might be inappropriate for them in particular, while the ecb can and must only target the euro area aggregate with its monetary policy. currently, eurosystem monetary policy helps improve the otherwise lackluster outlook for economic growth and price stability in the euro area. low or even negative interest rates favor spending over saving. asset purchases ( or quantitative easing ) help fix the monetary transmission mechanism. the provision of long - term liquidity to the banking sector supports lending to the private sector. forward guidance affects long - run interest rate and inflation expectations. let us not forget that the ecb ’ s readiness to do “ whatever it takes to preserve the euro, ” as announced in mid - 2012, was undoubtedly the decisive element in rees