, in my view, the most immediate and significant challenge facing emu is to reinforce the integration of both banking systems and capital markets. reinforcing the banking union when the euro was launched, there was actually an expectation that many banks would become truly european, providing retail services across the whole euro area. the reality is quite different. 6 / 11 cross - border consolidation remains very limited and most firms and households in the euro area remain largely dependent on their domestic banking systems to maintain investment and smooth consumption profiles. although no formal barriers to foreign banks exist, relevant distortions arise from stillsignificant specificities in banking regulations across countries. some of the existing savings banks, government - owned banks or regional banks in the eu are protected by national legislations hampering incentives to compete or effectively sheltering them from competition. moreover, regulation fails to fully acknowledge the benefits generally arising from geographical diversification in a single market. we also need to address the current deadlock on the third pillar of the banking union, the european deposit insurance scheme ( edis ). some experts argue that this third element may not be essential once we have in place a stringent resolution framework with homogeneous bail - in requirements ; but in my view, it remains crucial to make edis a reality. such a scheme would have a strong impact on trust and contribute to increased risksharing, insofar as it is designed as a fully fledged mutualised edis. contributions to edis taking into account bank - specific risks could limit the risk of permanent crosssubsidisation and would also help deal with the sovereign - bank nexus. this would contribute to reducing the link between national governments and banks and preventing destabilising cross - border flights to safety in the event of difficulties. moving towards a capital markets union the other key initiative to increase the integration of europe ’ s financial markets and to facilitate risk - sharing capacity in emu is the capital markets union project. the project aims at providing firms with the same funding opportunities, and households with the same saving opportunities, irrespective of the member state in which they are located. 7 / 11 however, inconsistent regulations, as well as varying market practices and industry standards across eu countries, prove to be key impediments in developing a truly pan - european capital market. as a result, country savings and investments are still highly correlated, a fact known as the feldstein - horioka puzzle. this correlation has subsided over time in the case

speech embargo 9 november 2023, 6. 15 pm a pillar of financial stability – the snb ’ s role as lender of last resort alumni wwz basel martin schlegel * vice chairman of the governing board swiss national bank basel, 9 november 2023 © swiss national bank ( speech given in german ) * the speaker would like to thank raphael reinke for his support in preparing this speech. he also thanks marc blatter, jeannette henggeler - muller, christoph hirter, michael schafer, jacqueline thomet and pascal towbin, as well as the snb language services. page 1 / 9 ladies and gentlemen today is ‘ national future career day ’, when girls and boys throughout switzerland accompany their parents to their workplace and spend the day watching them at their jobs. 1 i too had a visitor at work today, and once again i found that children bring fresh perspectives and often ask quite fundamental questions. this is precisely what i want to do in my speech today : to take a close look at a core task of the snb in relation to financial stability – its role as lender of last resort. in this role, the snb made up to chf 168 billion in liquidity available for managing the crisis at credit suisse this spring. such a number is hard to grasp. it corresponds to approximately one - third of credit suisse ’ s balance sheet total at the time, or double the annual expenditure of the swiss confederation. 2 why is the snb the lender of last resort and why does it provide liquidity assistance in this capacity? how does it provide this liquidity? what conditions does it set, and to whom does it provide liquidity? these are the fundamental questions i want to address today, while also taking an in - depth look at the challenges and limits involved. i will conclude by talking about the liquidity assistance provided to credit suisse. the role as lender of last resort acting as lender of last resort means that a central bank makes liquidity assistance available to banks when they suddenly need substantial liquid funds which they are no longer able to obtain on the market. it is an important part of a central bank ’ s contribution to the stability of the financial system. 3 the reason why this role is necessary lies in the nature of the traditional banking business. on the one hand, banks accept deposits from savers. on the other, they grant loans. in so doing they bridge the