##ducive to cross - border banking integration. before the crisis, supervisory coordination mainly took place through the lamfalussy process and committees, which were a major step forward and the best that could be achieved at the time. however, they were unable to fully iron out supervisory differences between eu jurisdictions. 15 this presented cross - border banks with substantial compliance costs and reduced the economic synergies of integration. for example, a commission survey in 2005 found that opaque supervisory approval procedures were a major deterrent to cross - border banking m & as in europe. the need to comply with different sets of rules and interact with several different authorities was also reported to be a barrier to cross - border activity. 16 the lesson from this period was that, while financial integration is ultimately a market - driven process, policy plays a key role in creating the conditions for it to progress. to quote the lamfalussy report, “ the eu has no ‘ divine right ’ to the benefits of an integrated market – it has to build one ”. 17 this ssm should help us in this building process. a single supervisor automatically removes some of the dividing lines between jurisdictions that create compliance costs. for example, there will no longer be a distinction between home and host supervisors for cross - border banks. instead, there will be a single supervisory model and eventually a single supervisory culture, rather than one per country. and crossborder groups will be able to report at the consolidated level. another benefit of the ssm – and perhaps a more important one – will be the lack of “ hidden barriers ” to cross - border activity linked to national preferences. with a european supervisor, borders will not matter. issues such as protecting national champions or supervisory ringfencing of liquidity will not be relevant. this means that banks will be in a better position to achieve the economies of scale that were promised by the single financial market – and that they also need to be competitive at the global level. it is of course for banks to decide whether such integration makes business sense. and some obstacles to cross - border integration that lie outside the remit of supervision – like company law and tax – still remain. however, the low profitability and excess capacity of the european banking sector suggests that efficiency gains could be achieved, and without exacerbating the “ too big to fail ” problem. improving risk - sharing even with a higher quality of financial integration, we know that shocks may still occur that cannot be contained within the private sector

john c williams : rising to the challenge - central banking, financial markets, and the pandemic remarks ( via videoconference ) by mr john c williams, president and chief executive officer of the federal reserve bank of new york, at the 16th meeting of the financial research advisory committee for the treasury ’ s office of financial research, 16 july 2020. * * * as prepared for delivery good morning. over the past four months we have experienced a series of unprecedented events. the pandemic, social distancing, and the economic fallout have transformed all of our lives. this summer, many americans will be grieving the loss of loved ones, and many more will be faced with financial hardship and concern about the uncertainty of the future. the pandemic has caused a deep recession and levels of unemployment we ’ ve not experienced in our lifetimes. at the federal reserve, we are working tirelessly to address the economic damage caused by the coronavirus and to put the economy back on a path toward achieving our dual mandate goals of maximum employment and price stability. in the first half of march, as the pandemic began to unfold in the u. s., the federal open market committee ( fomc ) lowered the federal funds rate effectively to zero. bringing the policy rate down to this low level reduced interest rates across the economy, making it easier for households and businesses to meet their borrowing needs and fostering favorable financial conditions. beyond these monetary policy actions, we have taken many additional measures to promote the stability of the financial system and to support the flow of credit. today, i ’ m going to focus my remarks on these measures and detail their significance for supporting the economy. but before i continue, let me give the usual disclaimer that the views i express are mine alone and do not necessarily reflect those of the federal open market committee or anyone else in the federal reserve system. a lesson from history ensuring liquid and smoothly functioning financial markets are essential roles of central banks, like the federal reserve. yet, it ’ s often poorly understood why these roles are so important for the health of the broader economy. it was the financial crisis that erupted in 1907 that led to the creation of the federal reserve system, and as we ’ ve planned and executed our response to the current crisis, it ’ s this history lesson i keep returning to. a number of shocks, beginning with the 1906 san francisco earthquake, led to a run on the banks in 1907. the run on