in funding markets have led to a growing fragmentation of the banking system of the euro area along national lines. links between banks and sovereigns have grown tighter, and in some countries the credit supply has been negatively affected. the conduct of a single monetary policy has become increasingly difficult as the transmission channels have become heterogeneous. this fragmentation was affecting the whole economy of the area, and a banking union has been proposed in order to re - establish a smooth transmission of monetary policy and ensure that the credit supply meets the real economy ’ s needs. some evidence on the fragmentation of the banking system first of all, let me give you some evidence on the fragmentation of the banking system. bis central bankers ’ speeches the ecb has been continuously monitoring the degree of integration in the euro area financial markets. the latest financial integration in europe report, published in april 2012, showed several indicators pointing to rising fragmentation in various market segments as the sovereign debt crisis has escalated. in addition to the price - based indicators highlighted in the report, quantity - based indicators also continue to point to a further and significant renationalisation of euro area banks ’ funding markets. banks located in peripheral countries continued to lose market funding, while those in some other countries retained it and managed to issue bank debt at attractive yield levels. the market for secured bank funding has also been affected by the increased tensions in some euro area government bond markets. differences between bank lending rates offered to non - financial corporations and households in euro area countries reflect divergences in bank funding conditions that go beyond country - specific economic conditions. let me give you a few examples. the coefficient of variation across euro area countries of the short - term cost of borrowing for non - financial corporations has been increasing towards all - time highs. also, in some countries retail lending rates have increased markedly, while policy rates have decreased. since mid - 2011, the rate charged by the ecb on its main refinancing operations has decreased by 75 basis points but the composite cost of borrowing has decreased by a similar or greater amount in only 20 % of cases. in another 20 % of cases, it has even increased by more than 25 basis points. the dispersion of lending rates has risen both across jurisdictions and across categories of enterprises. for example, the cost of short - term borrowing for corporates in france is still around the same level as that recorded at the beginning of 2011 ; by contrast, in italy, over the same period of time, the cost of

by mr draghi and a handful of ecb executive board members ; it came about with the agreement of the large majority of the governing council, on which all national central banks governors in the euro area have a seat. i would never have imagined that the euro area could break up, as almost happened in 2012. nor did i think it possible that the ecb would have to print more than an additional €1. 5 trillion ( i. e. €1, 500, 000, 000, 000 ), and pump it into the economy in order to respect its mandate. the ecb has acted resolutely but the story is not over yet. in order to emerge from the crisis, it is crucial that the other authorities also do their homework. it is not up to monetary policymakers to resolve structural problems. bis central bankers ’ speeches