, europe has a vast amount of untapped potential. at any rate, the differences compared to the financial markets in the united states are considerable. 2 / 6 bis central bankers'speeches let ’ s compare the domestic equity markets : in the united states they are about 148 percent of its gdp. in the euro area, it is just 50 percent of its gdp. 3 second, integrated eu markets are becoming increasingly important in a changed global setting. if others cut themselves off, it is crucial for europe to bundle its power. this is the only way to gain resilience and become less dependent on financial flows from third countries. at the end of the day, it is about funding the major projects for the future of the eu. it is about successfully transitioning to an innovative digital and climate - neutral economy! third, speaking as a eurosystem central banker, i support integrated markets from a monetary policy perspective as well. cross - border capital ties are a channel of private risk sharing in a monetary union. just to give you one example : if company owners are residents in different states, the distribution of business profits and losses spread shocks throughout the currency area. thus, economic shocks that hit individual member states particularly hard could be cushioned. without being a magic formula, market integration can thus help to make our economic and monetary union more stable in the long term and contribute to greater financial stability. how can the eu press ahead with capital market integration? but how can the eu press ahead with the integration of its capital markets? this is the second question i would like to address. since the start of the project in 2015, it has been clear that establishing a capital markets union is a complex mission, and also a multidimensional and long - term effort. in the past, progress often came to a halt when the differences in legal and tax regimes or capital market supervision seemed to be too great. furthermore, there needs to be greater trust : both among member states and also in their relationships with the commission. for the sake of making concrete progress on the capital markets union agenda, the bundesbank can see at least two areas where pan - european approaches offer particularly rich potential. first, broader capital market access for smes ; and second, more capital market culture among retail investors, particularly with a view to strengthening old - age provision. needless to say, sustainable finance also offers a huge amount of potential. the european commission is aiming for a green deal to make europe the first

process to moderate the pace of adjustments in the exchange rate. that we are doing and it is entirely consistent with our inflation targeting framework. but a more activist approach to try to manage the exchange rate would risk undermining the inflation target. in our domestic market operations, in the rand money markets, we have also achieved over the past two years a major streamlining of our activities aimed, here too, essentially at normalisation - to bring our operations back within the frame of normal central bank management of money market liquidity. we were out of this frame because the accumulated foreign exchange losses, described earlier, had two major distorting effects in our domestic markets. first, the losses accumulated on an account - the gold and foreign exchange contingency reserve account ( gfecra ) - which falls to be settled by the national treasury, but in the meantime stands as a claim on the assets side of the sarb balance sheet. we needed to find a way to fund that asset. secondly, the losses generated as their counterpart a large structural surplus of rand liquidity in the market. these two distortions - the asset on our balance sheet that needed funding and the excess liquidity held by the market - are essentially two sides of the same coin. we had to bring the two sides together, so to speak, by draining the surplus, in order to ensure that short - term money market rates remained in line with the policy repo rate set by the monetary policy committee ; and in doing so, we obtained temporary funding for the gfecra asset. at peak, in august 2002, the structural surplus we had to drain amounted to the huge sum of close to r70 billion. we drained this by the use of variety of instruments - some normal in character, e. g. bond repos, but some innovative or unusual, such as the sale of sarb debentures and, on a very large scale, so - called special money market swaps with deposits, which were foreign exchange swaps with the foreign exchange we gave on the swap redeposited with us. rolling over this diverse funding operation was a technically demanding task and i would like to pay tribute to my colleagues at the sarb who, long before my arrival, handled this task with skill, expertise and high professionalism. this was clearly not a sustainable situation. not only did it impair the central bank ’ s balance sheet, but it also had seriously distorting effects on the domestic money