##smoothed, for a 10 - year rolling window between 1991 and 2015. underlying data are from the annual macro - economic database of the european commission ( ameco ) and from the ecb ’ s harmonized competitiveness indicators database. ecb calculations. bis central bankers ’ speeches financial integration and achieving risk - sharing should be at par with specific proposals such as facilitating funding for corporates in general and for smes in particular. key areas such as securitisation, insolvency regimes, securities holders ’ rights and tax legislation need to be prioritised. all these are important to ensure equal treatment of users of capital markets across member states, the very essence of a cmu. financial stability implications of enhanced risk - sharing and other aspects of capital market development this brings me to the second part of my talk, where i would like to discuss the financial stability implications of enhanced risk - sharing. indeed, financial integration and the further development of non - bank financing may also create new financial stability risks. at a general level, greater integration can exacerbate the size and speed of cross - border contagion. international risk - sharing and cross - border contagion can be two sides of the same “ financial integration coin ”. 7 this explains why taking a macroprudential perspective on the financial system is extremely important for addressing potential new sources of systemic risk. with respect to the banking sector, the further development of capital markets increases competition and may incentivise banks to take on more risk to maintain profitability. 8, 9 to ensure that there are no unintended financial stability risks, we need to strengthen the european macroprudential regulatory toolkit for banks under the capital requirements directive ( crd iv ) / capital requirements regulation ( crr ). the european commission ’ s review of the crr / crdiv will provide an opportunity to revise and complement the current macroprudential toolkit for banking at the european level. it should entail, firstly, ensuring that instruments currently available are more targeted and overlaps are eliminated ; secondly, broadening the toolkit with additional instruments such as the net stable funding ratio ( nsfr ), leverage ratio ( lr ), loan - to - value ( ltv ) / loan - toincome ( lti ) and debt - service - to - income ( dsti ) ratio ; and thirdly, streamlining the process for notification or information procedures both in the

- term plans and implementation of the existing procedures. in particular, countries that still have sizeable fiscal imbalances should take advantage of the coming upswing to strengthen their budgetary positions and attain the targets presented in their stability programmes. finally, in order to put the expected recovery on a broad and sustainable basis, it is of the utmost importance that euro area countries now strengthen their efforts to implement comprehensive structural reforms. over the past few years, considerable progress has been made in enhancing the flexibility of the euro area's product and capital markets, as well as in improving the way its labour markets operate. these reforms, together with moderate wage developments, have contributed to the strong employment growth and the considerable reduction in unemployment witnessed in many euro area countries in the last cyclical upswing. however, unemployment is still intolerably high and much more remains to be done. in this context, it is important to make headway with the reform agenda put forward in the lisbon strategy. we should just not accept that the recovery might again be constrained by the unsatisfactory potential growth level. the sound macroeconomic situation which can be expected presents a perfect opportunity to accelerate badly needed reforms. this requires the acceleration of financial market reforms as well as product markets reforms, such as those related to network industries. as regards labour market reforms, it is worth noting that despite the continued high level of unemployment in the euro area significant mismatches between labour supply and demand in a number of areas in euro area countries are still reported. as concluded in a recent report prepared by eurosystem experts, published on 11 march, this provides evidence that despite some improvements, there is still much work to be done in the labour market reform process. with respect to reform on the financial markets, the ecb very much supports the implementation of the procedures suggested in the lamfalussy report on securities regulation. the ecb believes that the procedures suggested in this report will allow for a swift implementation of the priorities set out in the financial services action plan relating to the integration of securities markets. the reform of financial market regulation, also including the other measures foreseen in the action plan, will complement and enhance the effects of reform in the labour and product market.