jens weidmann : making the financial system more resilient keynote speech by dr jens weidmann, president of the deutsche bundesbank, at the 2013 fese ( federation of european securities exchanges ) convention, berlin, 27 june 2013. * 1. * * introduction president jochumsen ladies and gentlemen thank you for having me here today at this year ’ s fese convention. it is the first time i have attended this event, although there are numerous points of contact between securities exchanges and central banks. central banks and securities exchanges have in common that they provide the economy with an infrastructure which is essential for a well - functioning market economy. exchanges provide functioning and regulated platforms for the trading of securities, and so contribute to an efficient allocation of capital and resources. central banks maintain price stability, thereby among other things also contributing to allocation efficiency and laying the foundation for sustainable growth. another important task of central banks is to smooth the operation of payment systems. the eurosystem provides important infrastructure for the financial system, in particular target2. by establishing target2 - securities the eurosystem will also provide a harmonised and centralised method of settling securities in central bank money in europe that will improve settlement efficiency. 2. the role of financial market regulation some years ago, financial integration in europe was considered a one - way street leading to greater wealth. this view has been challenged by the financial crisis, since it has shown the flip - side of financial integration in europe, which is mutual contagion. in order to reap the benefits of financial integration without having the downside risk of contagion effects, microprudential regulation needs tightening and effective macro - prudential regulation has to be established. more generally, the crisis has also challenged the formerly wide - spread view that the outcome of financial deregulation is always good. adair turner, the former chairman of the british fsa, self - critically confessed in a speech he gave at cass business school in 2010 : “ we were philosophically inclined to accept that if innovation created new markets and products that must be beneficial, and that if regulation stymied innovation that must be bad. ” i definitely do not want to deny the merits of innovative, flexible financial markets. but with hindsight, i think it is also hard to deny that insufficient financial market regulation as well as inadequate oversight and supervision helped macroeconomic and financial imbalances to emerge or to intensify. moreover, differences in the speed

merit careful reflections. the ecb will support the developments of policy solutions at european level also giving its contribution to the commission ’ s consultation. iv. how to enhance the monitoring of repo and securities financing markets i would like now to focus on enhancing the monitoring of the repo markets. this market is largely an otc market where rates and volumes are difficult to observe in real time with the implication that there is no comprehensive source of information in europe. there are some important trading platforms where operations of short - term and more standard maturity take place, which can provide us some useful information. however, significant limitations or shortfalls do exist as regards existing data sets. first, market data are not timely and hardly comparable. the icma survey is conducted every 6 months, the ecb money market survey every year and the ecb money market study biannually. timelier sources of data are available among others from ccps or from trading platforms e. g. eurex repo euro market, icap brokertec or mts. as regards the ecb money market survey, there will be a pilot phase with a limited panel of banks to have a quarterly review. however, most data refers mostly or exclusively to the interbank market. second, there are significant limitations as regards data stemming from market infrastructures. data are fragmented and not complete, and are also not easily retrievable for analytical purposes5. finally, there are no statistical sources available as regards the repo and securities financing markets. one recent initiative will be of some help, notably the global initiative coordinated by the committee on the global financial system ( cgfs ) and by the ecb, together with other central banks of the eurosystem, which plans to launch a qualitative quarterly survey on credit terms and conditions in euro - denominated securities financing and over - the - counter ( otc ) derivatives markets. this survey is driven in particular by a need to monitor developments in securities financing, i. e. lending collateralised by securities, and otc derivatives markets, as well as in shadow banking more generally. the survey will provide information about changes in credit terms applied by the largest banks for lending against euro - denominated security collateral and for otc derivatives transactions with key counterparty types, as well as about main reasons behind the changes in those terms. this makes it a valuable monitoring and potentially early warning tool to support risk surveillance work and the risk identification process. first, available