long they can actually go. there are a number of concerns including banks ’ profitability, how negative rates may act as an anaesthetic to euro area governments especially in the euro area ’ s southern periphery, taking into account that the fiscal space gained from lower debt service costs may result in a slower implementation of necessary fiscal and structural reforms. policy rate cuts to negative levels have generally been reflected in corresponding declines in money market rates and short - term government bond yields ( see figure 17 ). in turn, the fall in bank wholesale funding costs has helped lower lending rates, but to varying degrees across countries. the decline in rates on new loans has been particularly notable in the eurozone ( vinals et al. 2016, jobst and lin 2016 ). inflation expectations have continued to decline in most economies with negative interest rate policies ( also known as nirp countries ). 13 / 15 bis central bankers'speeches in addition, there are concerns about the political and institutional feasibility of negative rates as their long - term effects are still unknown. most importantly, their effectiveness is put under question during a recession, if this were to emerge in the near future. i would personally, in my professorial hat, prefer to see more qe rather than further negative rates. if this is the case, the next question is where could more qe in the eurozone come from? in other words, does the ecb have the tools for more qe stimulus? well, there are several options. from changing the parameters of the current qe programme like, for instance, buying bonds below the deposit rate, increasing the 33 % issue share limit, dropping the capital key allocation, or even adding new securities to the pool of eligible assets such as bank bonds or equity. let me now turn to the effects of brexit on the dynamics of european integration and indeed offer a southern point of view and, more particularly, make five points from the south on the brexit vote. 3. a southern view on brexit ’ s implications for the eu1 the european union is currently facing crises on multiple fronts ( anaemic growth, high unemployment, persistently low inflation close to deflation, a debt crisis, an ongoing migrant crisis ), but brexit represents the biggest medium - to long - term challenge of all. i will focus here on a couple of rather important points. 14 / 15 bis central bankers'speeches euroscepticism is now a strong sentiment in europe. populi

nicholas c garganas : the european financial marketplace speech by mr nicholas c garganas, governor of the bank of greece, at the economist conference : private banking and asset management, athens, 22 october 2002. * * * ladies and gentlemen, let me start and by thanking the economist for inviting me to speak at this conference. in recent years, there has been a visible acceleration in the development and integration of eu financial markets. in what follows, i will discuss, first, why financial integration is desirable, second, why it has occurred, third, trends toward financial integration in the eu, and fourth, the role of public policy in supporting integration. why is financial integration desirable? i think it fair to say that the main function of the financial system is to serve the needs of the real economy, encouraging productive investments, allowing risks to be diversified, mobilising savings, monitoring firms ’ use of funds, etc. to this end, the development of both markets and sound financial institutions plays a key role. to the extent that increased financial integration allows the tasks of markets and institutions to be completed more efficiently, it will bring about greater benefits through two main channels : increased capital accumulation and higher productivity of capital. through these two channels, the greater efficiency of an integrated eu financial system will lead to increased economic growth and a higher standard of living for eu citizens. three main interrelated factors have underpinned the acceleration of integration of eu financial markets. the first factor is globalisation. the integration of financial markets in europe is part of a wider global development. globalisation has many dimensions, all of which have been stimulated by the decline in costs of communication, transportation, data processing, and transactions. the second factor is the advances in creating a common regulatory framework across the eu as part of the effort to complete the internal market in financial services. the adoption of a common eu policy has been accompanied by liberalisation of financial markets in the member states. as i will discuss shortly, however, there is still some distance to travel in this respect. the third factor is the adoption of the euro. before january 1999, the need to operate in many national currencies was a major obstacle to financial integration in the union. the presence of a sizeable exchange risk limited the attractiveness of cross - border investment, reduced the incentive to proceed with regulatory harmonisation at the eu level, and dampened competitive pressures in member states'home markets. the introduction of a common currency for twelve member