5 ] and thanks to sound regulation and supervision in the wake of the global financial crisis, banks have benefitted from stronger capital and liquidity buffers in recent years. that stands in sharp contrast to 2007 - 08, when banks ’ weak balance sheets intensified the impact of the global fallout. this robust starting position explains why, when the pandemic arrived, banks were able to be part of the solution in tackling the crisis, and not part of the problem. [ 7 ] but given today ’ s weakening economic outlook, there are no grounds for complacency. it remains important that banks make adequate provisions and undertake prudent capital planning. they should be attentive to credit risk and remain alert to potential flaws in their internal models as the risk environment evolves. banks also have a key role to play in contributing to resilience by having good visibility of near - term liquidity risks and concrete plans to tackle them ; strong cyber defences ; and the ability to withstand fire sales and the associated mark - to - market hit on assets held on their balance sheets. if not managed properly, these are all types of risks that are particularly likely to amplify and propagate shocks through the financial system. but building resilience cannot stop at banks : non - banks also play an increasing role in the financial system. the share of non - bank finance in overall credit from financial institutions to the real economy has increased from around 15 % to roughly one quarter since 2009. [ 9 ] if such alternative sources of finance are to work reliably, these institutions must be resilient to shocks too. the esrb has identified several vulnerabilities among non - bank financial institutions and has asked legislators to address them. [ 11 ] one such example concerns money market funds ( mmfs ). mmfs are intricately connected to the rest of the financial system, including banks. when the pandemic hit in march 2020, mmfs experienced acute liquidity strains. this reflected a structural liquidity mismatch at the heart of their operations, with mmfs offering on - demand liquidity to investors while investing in more illiquid assets. recent turmoil in the uk bond market again highlighted the importance of mmfs as cash management vehicles in the context of liquidity vulnerabilities. the esrb issued a recommendation last december aimed at addressing structural vulnerabilities in mmfs. swift legislative action on this front is vital, to allow non - banks

of the euro area, in particular with respect to the basic allocation of responsibilities in relation to budgetary policy, which remains in the hands of the national authorities. there is no need to have a single budgetary policy in the euro area. no need for a so - called transfer union. however, national budgetary policies have to be conducted in a framework which is consistent with a single currency. we need a leap forward in the governance underlying the economic policies conducted in the member states of the euro area. we should therefore concentrate our efforts on strengthening discipline first and foremost in euro area countries since they share the common currency, making use of the provisions of the treaty – notably article 136 – which has been inserted into the treaty precisely because the member countries of monetary union require enhanced economic governance. whatever is decided for the euro area could conceivably also apply to the rest of the union, but the discussion among all 27 member states should not water down what is necessary for the euro area. the second point is that the institutional framework can be strengthened within the current treaty, exploiting to the extent possible secondary legislation. there is no need for a treaty change to achieve the large part of proposals which are required and that we have put forward. there is also no time. as i mentioned previously, the doubts raised by financial markets about the ability of the system to become more resilient need to be answered quickly. if these answers are linked to a long and uncertain ratification process, doubts will spread again. let me now turn to the discussions which have taken place so far on the three main building blocs of the reform. on the subject of reinforced fiscal governance, a first step forward was made on 7 september, when the ecofin council endorsed the new framework of the eu semester as had been proposed by the commission in its communication of 12 may. better fiscal governance requires changes both at the national and european level. at the national level, the ecb supports the establishment of national fiscal frameworks that set out minimum requirements for compliance with eu fiscal and statistical rules and that in particular would promote more independence in the national fiscal assessment, high - quality standards, a medium - term orientation and an effective coverage of all general government finances. at the eu level, the ecb favours a strengthening of the fiscal framework around the five following measures : 1. more streamlined and hence more effective procedures in the assessment of fiscal developments ; 2. reversal of the burden of proof, making it more difficult for the council