great potential in this area, as demonstrated by the role of europe ’ s innovative pharmaceutical companies in developing a vaccine against covid - 19. and we have a lot of scope to go further. while different governments will naturally have their own goals and strategies, there are three cross - cutting areas where we can make progress. first, if we want new, innovative firms to emerge after the pandemic, governments have to remove barriers for them. this is not only about easing regulatory barriers, but also about creating a dynamic business environment. research shows that onerous business conditions – such as poor contract enforcement – penalise new firms much more than they do existing ones. and what young firms need is not only the ability to enter easily, but also to grow quickly. companies with new ideas need to be able to hire and achieve scale as fast as possible. [ 13 ] the rate of firm creation is actually similar in the united states and europe, but us firms grow faster. this is an area where we can make huge gains simply by taking full advantage of our single market. a deep, complete and digital single market would allow firms to expand faster and achieve european scale, thereby increasing the return on innovation and capitalising on a large market. second, for young firms to grow quickly, resources need to flow towards them. and since the new firms that create the most jobs are typically the most risky, access to early - stage financing is particularly important. so the financial sector has a key role to play. in particular, equity finance has been shown to be an important complement to bank finance in allocating resources to new rather than traditional industries. [ 15 ] this matters when it comes to green innovations in particular. recent analysis shows that equity finance helps to reduce an economy ’ s carbon footprint and to increase the rate of green innovation. [ 16 ] however, while venture capital investment in 2019 reached 0. 63 % of gdp in the united states, that figure was just 0. 05 % in the eu27. here again, we can achieve clear economies of scale by working together in europe. one reason that early - stage financing is lower in europe is that national financial markets are fragmented : funding highrisk, high - reward technologies is much more effective when there is a larger stream of new projects to compensate for the fact that the majority of them will fail. in the post - pandemic world, completing the capital markets union is therefore no longer a “ nice - to - have ”, it

svb was much faster than expected – much faster than lcr calculations take into account. which raises the question : should the lcr be calibrated differently? should we assume higher outflow rates? and do we need to improve our stress tests? we might also ask ourselves if there are shortcomings in the way we look at interest rate risk and the mismatches banks have on their balance sheets. in europe, the basel standards for interest rate risk have been introduced through the institution - specific pillar 2 requirements, and they apply to all banks. the recent turmoil underlines the importance of this regulation, as well as the need for continued vigilance. are we sure that the underlying assumptions for customer behaviour and deposit duration are conservative enough in today's digital world? banks should monitor very closely the assumptions they make when managing interest rate risk and adjust those assumptions if there is reason to do so. 2 / 4 bis - central bankers'speeches and finally, should unrealized losses – that is the difference between market value and the valuation based on historical cost – should those unrealized losses be better reflected in the capitalization of banks? and should we look at how instruments that are not marked to market daily are reflected in liquidity buffers? it would be for example useful to tighten the use of these assets as high - quality liquid assets. these are all valid questions that i think should be addressed. so that we can learn everything there is to learn from what happened at svb. let me now turn to this side of the atlantic, where we had our own shattered windshield. shattered by credit suisse, a bank that had suffered from a series of mismanagement problems in recent years, and that experienced previous outflows of deposits at the end of 2022. here, too, we witnessed a rapid succession of events. it took, almost literally, only one tweet to lead to the downfall of credit suisse. deposit outflows quickly followed, the share price fell and the cds spread spiked. in the end, the swiss national bank provided additional liquidity assistance, and credit suisse was sold to ubs. finma, the swiss supervisor, came with a write - down of credit suisse's at1 securities. the bank was not bailed out. instead capital providers contributed significantly to its restart, exactly as intended by the new legislation after the global financial crisis. at the same time, things did not go as smoothly as