 So, I have the privilege to present the European central banks and your report on financial integration 2018 And I will be followed by John Barrigan to present the Commission's report review on financial stability and integration If the slides could be pulled up on the screen that would be good So let me start hoping that the slides will come up very soon With some remarks on the aggregate picture. So my presentation is divided in two parts a first part where I will go over our overall assessment of financial integration and a second part where I will Select a few of the policy issues that we have discussed in this year's report And so let me come first to the aggregate picture If the slides were on the screen at this very moment, you would see two lines one is blue the other is yellow and I'm sure you see it in a second and We like to look at these composite indicators of financial integration the yellow one is the price indicator And the blue one is the quantity indicator So basically the yellow aggregate indicator shows the price differences across your area countries for money markets bond markets equity markets and banking markets and the quantity-based indicator shows the blue lines for cross-border holdings of equity bonds and money market transactions and What you see in this very moment is that we had actually a Significant recovery in the price-based indicator as you see on the very right-hand side The sharp increase in the yellow line, which is the composite indicator on prices Whereas we had not such a development yet Question mark in the quantity-based indicator because quantities tend to move slower as a rule than Prices this is a continuation by now of a reintegration trend or as I may say a post crisis Reintegration trend that started in the middle of 2012 which remember as a was a path breaking council meeting Where the banking union was agreed and then very significant decisions were taken Following after that and then this post crisis reintegration trend took off and actually last year in last year's report We reported these kinks that you see these stops of this reintegration trend which which is around 2016 which as you may remember was these times of political uncertainty in Europe where this reintegration trend stopped But now it has resumed in particular in prices. Where does this come from? It's primarily driven by equity return convergence and to a somewhat lesser extent in bond yield Convergence and overall driven primarily by the strengthening Broadening and rather uniform economic recovery in in the euro area uniform across countries Which obviously drives for example the equity prices. So overall and a lot of fundamental factors are behind this resumption of the Euro area reintegration trend now as I already remarked We didn't see precisely the same picture on the quantity side, which is the blue line So the cross-border holdings of assets the quantity of assets so which moves Sidewise and that basically reflects that in equity and bond holdings not so much Changed in terms of the investors cross-border holdings and there was a slight reduction in interbank lending over that reporting period that we show here After having given you this overall picture on the financial integration development both over the last year and the Somewhat the medium term. Let me highlight a few other interesting developments on the overall financial integration picture one Observation that we make in a special feature of this year's report Which is special feature B on call on the integration of corporate bond markets is that actually among other things? Investment funds can play a helpful role in quantity based integration for example On this chart you see a comparison of the current cross-country Capitalization of corporate bond markets, which is the very left-hand side Pillar the different colors reflect the share of countries in the capitalization of corporate bond markets and a comparison to the right for different financial intermediaries of the Direct holdings of corporate bonds of investment funds in particular usets here in this case And And you see that basically look at the third and the fifth column Which is the one for ICPF which is referring to insurance corporations and pension funds And the left the third pillar shows basically the direct holdings of corporate bonds across countries And the fifth pillar shows the indirect holdings of corporates bonds Cross-countries including also at the direct ones and including the indirect ones via investment funds via usets So you see that the colors become somehow when you move right some out more uniform which reflects that actually Investment usets help other investors like insurance corporations pension funds But also banks to a slightly lesser extent to diversify better across countries So in this regard they are helpful for quantity based Financial integration obviously we also need to that is a structural change given the Popularity of investment funds lately. There was strong growth in Europe and also in other parts of the world We the structural change in the financial system needs obviously also to be monitored from a From a financial stability angle as this can obviously change also To new sources of financial risks or different channels of transmission if financial shocks would emerge Which we actually do in our financial stability work in the ECB Third observation on the overall assessment of financial integration is related to how resilient is The integration that we have achieved after quite some time of a post crisis reintegration trend Now we do look at the number of indicators primarily in four dimensions Comparing cross-border holdings of assets along a number of dimensions on the left-hand side you see a chart of the relative proportion of Cross-border equity investment relative to cross-border debt investment Equity investment tends to be more resilient to financial shocks than debt investment Which is more subject to potential sudden stops if there are negative shocks the blue line is actually the The the share of cross-border debt securities holdings as a share of total debt securities holding cross-border to total And the yellow line is actually the cross-border equity holdings as you see the debt part is going down The equity part is going up and actually the red line is the ratio of the two which means in cross-border investment There is a trend since sometime with some fluctuations that equity becomes more important than debt And this is likely to be a resiliency enhancing Now this chart is representative also for a number of other indicators of resilience One is the share of foreign direct investment as compared to portfolio equity investments So within the equity class actually you have a similar trend that the FDI Across euro-aerocountries within the euro area becomes larger relative to portfolio equity investments And since the FDI is more stable than the portfolio equity investments That's resiliency enhancing you don't see that on the charts and the third dimension is the degree of Retail cross-border bank lending as compared to interbank lending interbank lending again is more subject to potential sudden stocks shocks sudden stops in times of bad shocks and And the retail tends to be more stable and as the interbank is Somewhat down relative to retail also that trends up and we also more resilient on the banking side So a lot of good news on the resilience There's one exception which you see on the right hand side Which I show there which is the relative proportion of long-term debt in cross-border holdings as compared to short-term debt So you have the long-term that is the blue line the short-term that is the yellow line and the ratio against red line And you see from the chart that actually after there was a trend of more resilience after the crisis Somewhere in 2014-15 it has reversed so the the long-term Debt holdings are more stable now and the short-term have increased So there's a slight increase in the short-term debt cross-border holdings relative to the long-term that which We should be monitor because that means that part of this enhanced in resilience that we saw after the crisis Has been a little bit reversed since then So this makes me move on to the selected policy issues that we have chosen from our report to present to you now The first point is based on a special feature that we have in the report a special feature a Which actually makes the point that Europe has an interest to better develop even further develop equity markets relative to other capital markets and financial markets and actually I heard from Vice-president Dombrovsky's a number of elements that are actually already in the CMU like a venture capital initiative and transparency initiatives on small medium-sized firms which is exactly what we mean here But there's probably also a long-term need to go beyond that and go further Based on a new literature that says now compared to previously that financial structure may matter more than we thought Financial structure means here is defined for the purpose of this feature and in that literature roughly as the degree of equity Financing relative to bank lending so capital market equity finds relative to bank lending so that literature suggests that Countries that have a larger share of equity market financing to bank lending or to debt Financing actually do tend to grow faster have a faster promotion of growth from the financial markets And we have in that special feature our colleagues have actually done corroborated this Findings for the European Union so basically based of 21 European Union countries Regressions were run where whether these results hold also for Europe and The results were basically of this new literature was basically confirmed So it was sure it shows here that the countries with the larger equity markets the sectors of that have good growth prospects actually experienced larger firm value added growth than countries that had smaller equity markets and Particularly this is also observed for sectors the high value added growth for larger equity markets for particularly High-tech sectors and patent intensive sectors So which relates to the fact that the equity markets are better than the bank lending markets in financing Innovative industries innovative growth industries and most interestingly perhaps perhaps the authors find that actually this Growth effect is driven less by capital deepening And more by labor productivity increases that come from these equity market financing Which again supports the view that if Europe wanted to enhance the financing options for growth industry innovative growth industries then Further development over time of the equity markets is particularly valuable This is not the only reason for developing equity markets There's also more material literature that suggests that cross-border equity holdings in firms firm claims actually enhance cross-border risk-sharing in federations in in in areas in economic areas like Like the euro area, which is based on federal countries So this increase of equity market development together with more cross-border holdings of this equity would actually also help countries to ensure against The risk of income fluctuations translating into a lot of consumption fluctuations for the household sector now very briefly what are directions how you could get to this and More important capital market based equity market financing We discussed this in a box in the chapter one of the report there are a number of directions Mr. Dombrowski's mentioned some that are ready in the capital markets Union agenda. We also tend to think that In addition to the current agenda There's probably also medium-term interest to go beyond 2019 and have an sustained effort in those directions and some of these directions include the following first enhancing financial literacy across countries which could lead Caterers parables to larger equity holdings and second the development of pension systems Mr. Dombrowski has mentioned the PEP which is a product where the investments could go But there's also another side of the coin is that is the savings is the private savings So as demography evolves probably the part of the savings has to increase the private savings relative to pay as you go And therefore more money would flow actually and could actually be used with such products like the PEP And that would also be part of the picture and Then a very important topic that was also already mentioned before as well is the insolvency frameworks So we have tried In this research that we probe report in the report this year to go Even beyond the very valuable initiative that is in the capital market to the agenda Which is the directive on the draft directive on insolvency restructuring and second chance Which proposes a number of very important directions to better harmonize and improve Insolvency frameworks corporate insolvency frameworks in the European Union So we were asking ourselves. So what what how what can one do to go beyond that? There's quite a number of things one could do and we just focus on two here Which is the reorganization proceedings and creditor participation So why these two well first of all our research suggests that improved insolvency frameworks in marriage measured in various ways and actually do foster risk sharing across countries again both through the capital markets and through the bank credit markets and that So these risk sharing the question is then in Europe in the euro area for example Which are the aspects of insolvency frameworks that are either very diverse still or where the average? Quality measured by what practitioners tend to regard as best practices is lower than say a very high high efficiency of an insolvency framework and you see in the chart on the left a characterization of a part of an indicator from the World Bank that is called resolving insolvency where you see among some of the insolvency framework aspects the dispersion of the differences across your era countries Which is the the the lines that the green lines for example, which show the maximum the minimum or the blue Rectangles they show the the difference between the first and the third quartile of the performance across different your air countries and you see that in terms of reorganization proceedings and Creditor per set participation in the euro area the dispersion is quite high still across countries It ranges between for the reorganization proceedings It even ranges between the minimum the maximum of the indicator which is zero and six here and for the Creditor participation is somehow similar and the median level of these aspects of insolvency frameworks Which is shown by the yellow bar in the middle of the blue rectangles Actually is quite a bit below the maximum value of this indicator, which is six So we would argue that these are going further for a medium-term perspective of a sustained capital markets effort in Europe would be valuable directions to go forward to further work on the dossier on insolvency frameworks now, we should of course be careful and also remember that Insolvency frameworks also depend on the court system and there is also this dispersion in the judicial efficiency Across European countries so the insolvency legal insolvency frameworks can only work as well as the legal system does that supports it And it's a complicated matter a lot of competence is required in a judicial system to Efficiently handle frame insolvency frameworks, and there's also dispersion in Europe so and probably there's a number of countries where probably the judicial efficiency would need to be enhanced where it's still relatively slow and Formalistic and as we know from other empirical work the slower the system operates the lower tend to become the recovery rates in the recovery rates in insolvency proteins, which then is bad for the investors So the investors are my enthusiastic to invest in areas where actually in case of default the recovery rates are better So the court system is very important now. This is something very difficult to change Obviously, it's a very deep-rooted historical aspect of fun of of an economic system is the court system So what would be alternatives to make faster progress? Well many countries have made good experiences without of court frameworks And again the pictures quite diverse their countries in Europe that have them Relatively well develops there others that not so the question is what could we do there to make a bit of progress? So one option would be a non-binding EU guideline that the countries could benchmark on and that could be used a More substantive step would be to introduce a formal EU regime for out-of-court settlements, which could be contemplated Then there are other issues of insolvency frameworks. I've only talked about the capital markets and the corporates here There's of course also the financial system at ECB and other players have views about in the banking regulatory framework How there the solvency side could be improved two aspects are mentioned here the good general depositor preference and a better harmonization of supplementary capital instruments, which are more on the banking union side, which I just mentioned in passing Then the question is in the small list of my policy issues that I've picked from our report is that there are a few things where we can contribute as ECB or for example in this case here what you see on the slide now ECB banking supervision and with respect to improving the background for capital market for capital markets and banking markets and in the banking market side here We have picked the options and national discresions of the banking regulatory framework So we have a single rulebook in Europe But it has a peculiarity in Europe that there are a lot of options and national discresions For specific countries that can apply for their country certain aspects differently Aspects that are affected by that in this feature of our banking regulatory framework are capital regulation liquidity regulation large exposure regulation and also Certain governance issues and but then there are the possibility for the competent supervisors to actually make waivers Just to take an example if there is in the liquidity coverage ratio the necessity that subsidiaries in different euro air countries have to fulfill it in each single country rather than in the consolidated way for for a cross-border group then the There is a possibility to enact a waiver to say that actually the prudential requirements are well enough fulfilled such that actually the LCR has only to be fulfilled for the whole concern across all European countries Which of course makes it easier for liquidity flows within the concern to move and this is just by means of mentioning one Example that you understand what I'm what I'm talking about something similar is on the on the capital side now here the ECB monitors and actually Suggests to move impediments to waivers to these waivers four cases where they are not justified by Prudential considerations and in the in the table here I have made a short overview taken from the Box in our chapter two on the options and national discresions where quickly summarize the current policy So on the liquidity side, there's an existing policy. It's in the current framework to use our waivers It's actually in in the article eight of the capital requirements regulation and an ECB guide on option and national discresions And it says that the liquidity waiver can be granted to subject to certain prudential conditions that are listed Down there. So there are certain thresholds below which you can cannot go and actually there's even a review clause that Some sometimes soon and there will be reviewed even to lower these type of lower bounds of reducing The thresholds for for the liquidity waiver and so that is an existing policy Then there's a proposal from the ECB site on the capital side an opinion on the review of the capital requirements regulation subject to certain a supervisory prudential precautions that again a waiver could be made could be made easier and It follows a similar approach certain prudential precautions have to be fulfilled to it to receive this waiver and then there should be a review after sign some time to see whether the prudence was was Fulfilled and then one could think about potentially relaxing that over time. This is at the level of a proposal It's not yet the current in the current Framework, but we have the view that in line with the banking union over time This there they could be progress for example along the lines of the of the capital waivers for example and that concludes my presentation with a remark on I Said what we can do ourselves and here I took the example of the Payments and settlement infrastructure so as many of you know 2007 was a very important here from that side from Activities supporting the European capital markets that we also contribute ourselves the euro system the national central banks and the ECB a Major milestone was reached by the introduction the full migration of target to securities Which was fulfilled as I believe in September Last year a major milestone in the integration of securities markets in particular their post trade landscape Which are now having 20 European markets and 20 central securities depositories operating on a single platform the t2s platform Thank you very much Okay, good morning everybody. I would like to start by thanking the ECB and particularly Victor Constantio for hosting the conference this year I'm also very pleased to follow Philips accent presentation by presenting the Main elements of our own report for 2018 for those of you referring to an older program You're probably expecting to see Olivier Garçon here Due to a last-minute change Olivier could not make it so he's asked me to step in I'm happy to do so You can be assured the speaking notes are exactly the same Even if the accent is a little bit less exotic, let's say Let me start by presenting our report. I mean the I will move this forward the first First chapters of our report tend to focus on an overall assessment of macro financial conditions in the EU and In the euro area economy I think here the general message that comes out is that the economic and financial environment has continued to improve in 2017 and into early 2018 I think economic activity has strengthened We see which is important from our perspective of CMU that market-based funding is becoming a little bit more pronounced and The resilience of EU banks has been further reinforced So our overall assessment of macro financial conditions is positive and this I think reflects a range of policy measures that we have taken Both here in DCB, but also elsewhere throughout the post crisis period So in a sense It's been a rough road, but we're we are beginning to emerge. I think from this post crisis period It does not mean however that we're out of the woods I think the experience of the crisis teaches us that we should remain vigilant at all times We should not take our eye off the ball and even if the economic and financial trends are generally moving in the right direction I think the crisis has left many legacy problems and While exiting some of the crisis response measures that we've taken will themselves present important policy challenges So we are doing well, but vulnerabilities and risks still remain The report also contains two special features folk at special focus chapters and these take a look at Two aspects that I think will be important to future policymaking in the EU The first as the vice president mentioned examines the development of local capital markets particularly in central and southern eastern Europe We there what we want to do there is to broaden our understanding of how these kind of local capital markets And how they can develop in a way that is consistent with the future their future integration into a broader a single capital market, and I'll come back to that later The second special chapter focuses on the fintech sector and more specifically on the so-called crypto tokens And crypto tokens have received a lot of attention lately Not least because of the Bitcoin bubble But the extent to which these kind of phenomena like initial coin offerings can be viable sources of alternative startup Financing has received less attention, and so we want to look a little bit more at the the opportunities of these Phenomenon rather than focusing uniquely on on their risks. Let me just start by looking at the overall Economic situation at the beginning of 2018 and back into 2017 our reporting period I mean as you see their economic activity in the EU has strengthened gradually throughout the period So quarter-on-quarter growth rates in the EU and the euro area are now well above two and a half percent Although the last quarter did so some sign of softening But what's important for us underlying all these figures that all member states now all member states are enjoying positive economic growth Our inflation has remained subdued and this is despite narrowing output gaps and the improving labor market conditions Interest rates have also remained low Supported by the monetary policy stance and the ECB's asset purchase program And I'll come back to some of these issues later when we talk about some risks on the horizon I think Because of low inflation and low interest rates, you know investors have been expanding their activity particularly in bond markets where they have showed a renewed and increased appetite for yield moving into the less Credit-worthy sectors of the market it interestingly this volume is going up But I noticed from Philip's presentation that it's not necessarily moving across border But in overall terms, we are seeing that the use of cross-bond of bond markets is increasing as The use of bond markets has increased the spreads on corporate bonds have narrowed across the spectrum. I Think we've put up here sovereign bonds mainly because of the experience We had in the euro area debt crisis So it's important to note that in this period of recovering growth Sovereign debt yields and the spreads on sovereign debt yields have also narrowed This is partly due to a a small rise in benchmark yields as economy recovers But more importantly towards a decline in the in the periphery for the decline in the peripheral yields So in general the picture is looking a little bit better on the sovereign debt side as well Was not shown here, but also I should say EU stock markets have moved higher in 2017 This is again reflecting the improved economic conditions Now this trend was interrupted by a rather abrupt correction in February in global stock markets We think mainly linked to concerns about global trade. That is now largely reversed itself But the fact that it happened, you know reminds us of the sensitivity of markets now particularly equity markets markets in general to You know outstanding news and oncoming news And so while low interest rates have kind of eased funding conditions and supported growth They've also been associated with in a sharp increase in the valuation of bonds and the valuation of assets and also the valuation of real estate So some of this will sound Uncomfortably familiar to those of us who are around before 2007 So, you know these valuations are there But we must be aware that they could be brought into question by any sudden or sharp change in risk premia So what we see now is an overall market Participants seem to have shown confidence in the prospect of a sort of orderly unwinding of the unconventional monetary policy measures taken in response to the crisis On orderly winding perhaps over a extended period of time I think such a smooth and gradual unwinding would gradually raise risk-free interest rates and help take Hopefully some of the froth out of these other market segments But this is the central scenario and more abrupt adjustment scenarios of course cannot be ruled out And indeed the risk of a more generalized and sustained correction in asset prices is one of the main Macro potential risks identified by the ESRB and by the way that risk has been on the table now for for quite some time Now amid this global economic recovery what we have seen is international capital flows have stabilized Albeit at lower levels than before the crisis It's difficult to say if we have now come back to what is a new normal I'm not sure what you normal is anymore crisis has changed most of our metrics But I think it is very unlikely that international capital flows will return to the pre-crisis levels This is for two reasons. I think first the crisis itself show that these levels were unsustainable Before the crisis and they were of course corrected and second the global imbalances that underlay those international financial flows Are not there and our intention is to ensure that they do not reemerge So it is difficult to say where we are in terms of the trend in international flow of capital And I think there's still scope for further like financial globalization But this time we better ensure that it's on a sound and a sustainable basis Now within this context of stabilizing international capital flows It's notable that both the EU and the euro area have remained net exporters of capital Indeed the euro area is now the largest exporter of capital globally Investment in both EU and the euro area has increased But this export of capital of course reflects the fact that the recovery and investment levels at least as far as we can see Is not yet complete and based on projections for the savings investment gap The EU is expected to continue to export capital in net terms throughout the next three years Now foreign direct investment has become relatively more important Which is quite good news because this trend towards FTI is a little bit more conducive to safeguarding financial stability Because I think as mentioned by Philip as well some some investments are less sensible or less susceptible to stops and sharp reversals and FTI is one of those so we're quite happy to see that trend given our Focus on capital markets union and our central aims of capital markets union is to incentivize businesses to diversify their funding sources so we're also keeping a close eye on the Reliance of firms on market funding which we hope to see go up over time I think the crisis revealed the vulnerability implied by an excessive reliance on bank-based funding So this more diversified financial system We think is not only good for economic growth, but also good for economic resilience And in 2017 Non-financial corporations further increased their reliance on market-based funding For example corporate bond issuance expanded rapidly at an annual growth rate of 9% now What we see when we look back over the last few years is that bond financing We think is becoming a more structural component of non-financial co-operate corporations financing mix What that means is that more recently bank and bond financing have acted more as Compliments to each other whereas earlier in the post-crisis phase It was clear that market-based funding was substituting for a decline in bank lending Equity financing has also increased but again at a slower pace than bonds Current IPO activity is still well below pre-crisis levels And we think it looks below what one might expect to see in the current economic upswing so this is a concern for us in terms of CMU and No increased investment in equity is a key objective of what we're doing in Capital Markets Union And these figures would suggest to us that we are not yet where we want to be in CMU And so it's essential that any unjustified barriers Regulatory or otherwise faced by firms wishing to fund via public equity markets are alleviated or removed And that's a large part of what CMU action plan is about Quick word on banks Because developing a sound banking sector of course is another key priority for the EU policymakers We think on average European banks further improve their solvency in 2017 and managed to slightly improve their profitability When you look at averages around European banks, of course, you must always be aware of the distributions which are often Wide but on average we think the European banking system is improving in terms of its solvency Bank capital positions have strengthened Driven mostly by the client risk-related assets Credit risk has declined overall and despite these significant differences across banks and member states I think the picture in general is good As a quality improved slightly as banks in most member states took measures to reduce their remaining stock of non-performing loans And on the liability side European banks increased their alliance on deposits and that so secures more stable funding Interestingly the reform of balance sheets has tended to sort of realign bank business models towards their more traditional activities So you see more lending and depositing as a percentage of the total balance sheet so they have reduced their market-based exposures in the form of securities and derivatives and increased the weight of loans and deposits Banks have also improved their earnings performance by reducing many operational costs They've availed of lower funding costs and they've had some increase in net income related to fees and commissions So all of this reflecting some more buoyancy in financial markets and the economy more generally I Would say however that the profitability remains a challenge for EU banks given the prevailing low interest rates and The tight net interest margins that most of them are facing and of course in some cases High provisions covering non-performing loans High NPL ratios and some member states I think are one of the main legacies on the crisis Progress has been made in reducing these ratios with the EU average. I think the vice president mentioned now falling towards 4% But again, this average is well above the historical norm and of course it hides pretty wide dispersions dramatically wide dispersions in some cases across member states Well, that's just a quick summary of where we are on the sort of overall assessment in the early chapters of the report I would just say a few quick words about the two special focus chapters As noted in the ECB's report the further development of capital markets and equity markets in particular And this is the point that was amazed particularly by Philip. This is very important in terms of cross-country risk sharing But it's also important to foster innovation and growth and why there has been considerable economic convergence in the EU since 1999 I think many of the member states are still at very different stages of financial development In particular the capital markets of member states in central and eastern Europe are structurally less developed than the markets of other member states Both in terms of market depth and access. I mean to put this bluntly if you take the capital market union action plan to Zagreb They sometimes ask you exactly what is in this for me What is in this of course is a part which talks about Developing financial markets and not just integrating existing financial markets Now vice-president on Brussels has mentioned that these member states account for the fifth of the population eight percent of its economy But they're very much underrepresented in terms of total EU listed shares and outstanding bonds. I Think you will see in these two charts. I'm not going to go into detail Which you'll see that you know these countries are all located in the towards the origin of these charts Which is the weaker part of the spectrum So it indicates that the potential for development in these member states is there both in terms of listed shares and debt Instruments and indeed in terms of financial market access more generally So, you know, we are putting a lot of attention now on local market capital development In as a means to help these member states to catch up in their financial development And then therefore also to plug themselves in to a more efficient single capital market that we hope to build with the CMU action plan You know to that end, you know, we look for things More towards the lower end of what we call the funding escalator. So we're looking more for Venture capital private equity business angels these kinds of developments in these countries So that they can reach a level of development where they can then of course move into more Mature markets around public equity and bond markets We are providing technical assistance to many of these member states And what's important in providing this technical assistance is to understand that we have to use that to improve the operating conditions For institutional investors, but in particular for private equity and venture capital funds. So we need to optimize these conditions That means not only a sound regulatory and supervisory framework, which we can give them from the EU level But also means that they must have strong institutions nationally as Philip was mentioning in his presentation. They need reliable legal systems and efficient judiceries So all of these things we will have to work out This in a way is easier said than done Strong institutions are built over time Reliable legal system many member states see their system is already reliable. This is a matter of Reception and efficient and effective judiciary. Well, that's an area where we don't want to get into but of course These out-of-course settlements that Philip mentioned are one way in which we can make judicial systems more effective But of course they do require specialized courts and from my experience in one particular member state during the crisis Though judiciary is not always keen on having specialized courts They seem to believe they are wise in general and therefore they are wise in the specifics as well So, you know, we're not all this in mind. It's difficult job But we are you know working with this we want to develop local capital markets And we see this as going hand-in-hand with the objective of achieving market integration at EU level There is however always an inevitable tension here. I should admit it What we don't want to do is to create another 10 or 12 local capital markets I have all developed on their own way and are almost impossible then to integrate when we come to the integration phase so this is Process where we will try from the center to give some guidance in terms of how they develop so that when they reach a mature stage They will be better and more easily able to click in To the more developed market in the other member states Award then about our second special focus chapter which is on crypto tokens You know, I think it's clear that the future of the EU financial system requires a successful integration of these kind of value-creating Fintech solutions that certainly is what we believe and what we stated clearly in the action plan we produced recently At the same time we must be vigilant against the risks that some of these new technologies will bring along But I think the balance for us must be in terms of looking at these things as opportunities and not always looking at them in terms of risks So in this second special focus chapter we zoom in on one specific aspect of fintech, which is the development of crypto tokens And we attempt in this chapter to shed some light on the phenomenon of so-called initial coin offerings These ICOs now these ICOs have recently become topical due to the substantial funds being raised by blockchain startups The second half of 2017 was characterized by a spectacular rise in the price of Bitcoin and the emergence of hundreds of crypto tokens The aggregate market capitalization of all types of crypto tokens went up from about 17 billion euros at the start of 2017 to almost 700 billion euros a year later. This represented a 45 old increase So it's starting from a slow base Small base, but it's moving fast and in part. This was driven by the growing popularity of ICOs, which of course require the use of crypto tokens now in 2017 EU startups raised some Euro 750 million through ISO ICOs Representing over a fifth of all funds raised through ICOs globally And this context we think the term initial coin offering is of course meant to resemble The term initial public offering But they are of course rather different processes You know if you draw parallels between ICOs and IPOs, I think this is misleading Most ICOs have so far come at a very much earlier stage in a firm's lifecycle than an IPO would So I think the more appropriate comparators and we believe this in the report The more appropriate comparators or benchmarks for ICOs would be various types of risk capital Including equity crowdfunding and venture capital These sources of financing are all relevant during the inception seed and early growth stages of company development So in a sense you can see a link here in this chapter and the earlier chapter to see to one extent some of these newer financing models might even be usable in some of the less developed markets Now we believe that the term token sale would reflect the substance of the phenomenon of ICOs far better than IPOs, so let's use token sale It can be described as an entrepreneur selling tokens to fund the startup Usually in exchange for established crypto currencies such as Bitcoin or Ether Now clearly ICOs or token sales offer amazing new financing opportunities for small businesses and we see them as opportunities But of course investors and particularly retail investors can take significant risks when investing in these operations So while we see it as an opportunity We are not of course naive about the risks So in cooperation with market supervisors The commission is exploring ways to ensure that the regulatory objectives of applicable consumer protection and financial services legislation are fully respected and To this end in general we believe that the ICO market probably needs to become more transparent Also given the global nature of ICOs I mean regulatory cooperation at global level will also be essential for developing a market For ICOs that achieved global scope and avoids the risk of regulatory arbitrage Interesting enough though I was in the United States a week before last and they're very much at the same level of discussion as we are here in Europe This is something which looks very interesting Great opportunities, but potentially risky. So we're all trying to work out. What is the best way to approach it? So then we conclude by just summarizing that in our view macro financial developments in 2017 and early 2018 Confirmed that we are progressively emerging from the aftermath of the financial crisis Not bad after 10 years I suppose And the EU economy economy is witnessing one of its longest and most broadly based periods of recovery Financial conditions remain favorable reflecting a generally supportive policy stance But this of course we always say and I come from the financial stability side. We must remain vigilant. I Mean, there are many legacy risks out there and they remain potentially threatening Bank balance sheets remain under pressure in many member states either due to still high NPL ratios Still low profitability or indeed a combination of both New risks linked to possible overvaluation of assets or high levels of debt debt levels being even higher than they were before the crisis are emerging in in the context of this possible future withdrawal of accommodate of monetary policy But To end on a more upbeat note, I think we're looking forward. We should not only focus on risks We focus on risks for a long time. We must also grasp opportunities I think and the opportunity to develop and integrate capital markets in the capital markets union is one and there's an opportunity to Incorporate new technologies in our financial system is another and I'm hoping that when we're at next year's conference in Brussels We will be talking about a further reinforcement of the EU's post crisis recovery and further progress in grasping the important opportunities of financial integration and innovation Thank you very much. Hey, we have some time for questions. Obviously, so the floor is open There's a gentleman in the middle and Please don't forget to state your name and affiliation. I think thank you very much for the presentations Antonio Garcia del Riego Comments made on the need to enhance equity capital markets over Europe and the link with Providing finance to innovative firms in Europe, I think that we have a very Recent and important example of the need to foster this when we have seen spotify going to the states to raise capital My question goes in the direction of what can we do to move fast quick On this endeavor because it's becoming crucial for for Europe I Think I agree with one of the comments made about the need to enhance equity literacy in Europe But I think that we have to foster more things today we see Tax bias in favor of debt the society for instance and it is something that I think we have to consider So again, my question is how can we move fast in this direction. Thank you Thank you. Shall we collect a bit? Let's collect three questions and then we will try to If they are further questions on equity for example, so there's another lady Natalie gay Google I'm from HSBC And it's also a question relating to the equity markets in Europe We've just implemented and we are still implementing me fit to Which obviously had the clear objective on improving price formation and the functioning of markets in Europe It would be good to have of course an impact assessment of me fit to and how it's impacted research Indeed price formation market liquidity, etc And as you mentioned also previously impact of the Brexit on the functioning of capital markets in Europe and So it's really a question for you to is an impact assessment in the in the process of being made by the Commission or the ECB and also We've implemented a lot of very useful regulations such as Mads mar and and other market regulations that are really improved the way Market participants operate including with all the EBA And the ECB Guidelines in terms of Operations internal control, etc. So this comes at a cost Which means that if we want to develop local markets in notably in Central and Eastern Europe and we of course we don't want to And to reduce these to Reconsider these requirements Because they come at a cost. How can we what kind of solution could we imagine together? To make sure that these regulations are complied with But at the same time they do not in the Constitution of a new market participants Let's take one more question In this round so Michael had asked again from good University Frank You talked about capital market Development in especially in these countries that you identified One thing we know from research certain in the household side is that a very important determinant of stock market participation of Households is their previous experiences their historical experiences with their own markets And in many of these countries that you identified they have been you know disasters sort of crushes and also a sort of political twist You know the cultivation of the idea that somehow stock markets get manipulated By big players, maybe even by politicians or maybe by others and They are not to be trusted so the Think to get this out or to to try to escape from this predicament Neutral funds that tend to invest across different countries, you know with different experiences and different Reputations if you like different stock markets with different reputations might help both the residents of those Countries with bad experiences, but also You know the residents of other countries to diversify And to pump more capital into those as well. So is the but Again these impose requirements informational requirements not only for not general financial literacy, but also requirements on financial advice on transparency on advertising cross-borders and on increased familiarity with Different stock markets and different companies across borders. So is The Commission and the ECB thinking in those directions as well and what could promote that? So let me make a small start and then John will follow up So On the first question, how can we make Fast progress on the equity side I'm afraid that I don't have a panacea to make this fast. This will not be fast I mean, let me put it this way It's important that we make sustained progress step by step by first Implementing the currency and your agenda and the list of items that vice president on broskis has Mentioned that are not all adopted by now and they should be adopted soon in order to meet the deadline of 2019 for example The one thing so and I'm afraid that most things that That that I can come up with are will not be fast They will not be there will not be for this year in three years probably even not Substantive impact the impact will unfold over time, but you have to start and So indeed if you take the two examples that that I mentioned in my presentation or the three which was financial literacy pensions and Insolvency frameworks. These are all for the long haul. There's no doubt about that So, you know, you assume you introduce Larger education in secondary school on, you know, you have to save more for your pension About what is diversification? What is accumulated interest? These are the basics To do this then this generation has to grow up and has to start saving So we're talking about decades the same for accumulation of assets and pension systems again Even if more decisive reforms would be in the countries that have a lower private savings There are some countries in Europe that actually have substantial private savings in their pension systems in in the euro area Netherlands Finland they have made large steps in that direction But the accumulation of assets and the cross-border holdings that gives all the benefits that will be again is a is an issue of Decades so one should not pretend that in a particularly if you think about like what is the comparator? No, of course many people say the US is the comparator in terms of equity market culture But we should not forget the US is also in in here in extreme. It's actually an outlier in the world There is no other country with such large substantive equity markets both in the risk capital side And in the in the public market side, so it's actually not necessarily the most relevant benchmark But if you think like say Closing say let's say a quarter to the Substantiveness of the equity markets in the euro area compared to the US say let's say a quarter Which no which is some material but this is something that These single measures if you would enact them that will take again that will take that it will not be fixed fast the one thing you mention on the tech side there is actually a something in the Proposal by the Commission on the common consolidated tech space and we in the ECB tend to be supportive of Diminishing the tax bias favoring debt relative to equity for example in the direction of Making the equity more attractive Through a similar or a treatment that goes in a similar direction as of as for that that would be a direction that actually Would not have so that you know that that direction is something that a You know can be I think can be envisioned and is actually mentioned in those proposals is actually so And and that is the one you mentioned I think we tend to be favorable towards that to to go in this section not only for the perspective of the equity market development That's one aspect of it, but also from the financial stability dimension and you know I talked about debt versus equity in terms of financial shocks and That would be if you look at the literature actually The more decisive evidence that we have actually showing that the financial stability implications are particularly valuable in this regard So that would be unfortunately no panna say on the speed of this Given the differences to countries that have these more and and and the means that we have in our hands I don't know the one thing I wanted on Michael Alasos question on How we can you know make the Citizens of the countries that made already bad experiences losing money In past episodes You know feel more confident obviously I would argue that financial literacy still plays a role because it Helps you to understand that you have higher return if you have a long breath No in the equity side, so you will sooner or later earn if you hold In contrary to if you invest and divest in the short term and maybe subject to the volatility of the equity markets And I would point you to also to the panel that is coming on the banking union because there will be money Go yours from the Consumer Protection Bureau the European one Which I believe plans to talk about enforcement of consumer protection and I do think this is an important topic But since these the expert I would ask you to For your patience that this comes up and what she lets us know in which directions you would like to go on the enforcement side No, Monique. Okay, good. She promises. Okay Sean would you yeah? Look does kind of central theme which I detect through the three questions Which is know how do we get this balance right between? Encouraging the growth of markets by facilitating access to issuers and investors Well at the same time, you know maintaining a degree of a standard of market integrity It's a standard of protection that allows people to remain confident in those markets because it doesn't matter How easy you make it for people to use markets if they don't believe they're safe or they don't believe their sound markets Then they will not participate or worse again They may participate have a bad experience and then have a sort of cultural shock that has been being mentioned So this I think is a problem that we face as Regulators legislators all the time. How do we strike that balance? If I go down to the three questions in terms of the equity market Well as Philip has said we have it, you know try to address this debt bias in the CMU action plan The problem with the debt equity bias, of course is that it's in the area of taxation Which is an area of unanimity from Member States an area of Member States are quite reluctant to to go We have how I've had you know quite a success around withholding taxes I mean we had We now have a sort of code of conduct in how to handle The application and indeed the the reclaiming of withholding taxes Which I wouldn't have thought we would have got and we certainly didn't get before we put it in the context of The Capital Markets Union so we have reason to be confident that if we can put this debt equity bias in a more general Discussion around the need to boost and create single or more integrated equity markets We may get something more out of it, but typically Discussing tax with Member States is not the most it is not the easiest thing for the Commission to do in terms of Indeed In you know, I go back to my previous life around Jovenil reports be the equity markets is particularly tricky to integrate because of post-training problems Corporate laws tend to be different across different Member States. We would need to work to harmonize these To make cross-border equity holding more easy There's an issue of culture in some countries the culture is Stronger than others if you look across Europe some Member States have a much stronger equity culture than others And it doesn't emerge in the countries where you think it will So there is a sort of cultural thing as well So all of this means that if we're going to build the equity market It has to be sort of strong But let's not assume that it's going to be fast We have to work on a number of issues and we are working a number of issues But I'm not going to promise you that you know in the next year. You're going to triple your equity volumes On Miffet 2 I always have to remind people that we are the only people that do impact assessments on our legislation They are then changed subsequently and are not impact assessed So what has come out now is a you know is the result of the co-legislator We will eventually have to impact assess this. It's quite soon to do so. However, it's only a few months in place We are monitoring compliance So far so good, but of course we will only see compliance issues emerge over time I was dragged back to my Christmas holidays because the 3rd of January was a big day But you know nothing was ever going to happen on the 3rd of January. I was there anyway just in case but nothing happened Problems with Miffet will emerge over time and we will have to to monitor those. We have a commitment to review it anyway Formal commitment. So in that context, it will have to be done And in terms of you know, how we how we kind of manage the MAD Mar against the need to develop markets Well, again, this is this balance we have to find what I can say is that in the CMU We've been trying to simplify for SMEs in particular We've been trying to introduce a degree of proportionality and if we can get that right These less developed markets are much more aligned on SMEs than others. So that may help them as well But again, this is not about just turning up the rule books because you want to develop a local market If this market is not sound and it's not safe and has a problem Then we could destroy the culture for another generation and that's something we don't want to do And and basically that comes to your question about historical examples of disasters in these countries Yes, they're there. That is why we're trying to do it within an EU framework So we're trying to say look we are giving you this EU framework and within that framework We're going to develop these markets. So the risks about manipulation the risks the concerns you have should be less this time than before But again, you know, it's about building a culture in these countries a culture which was damaged I don't doubt it and in terms of mutual funds absolutely cross-border investment is a way to go Anyway, their domestic savings rates probably aren't high enough to support a vibrant local market They're going to need foreign inflows and if these come in the form of mutual funds All the better for us. And then lastly one thing we're doing that our technical assistance is focusing on the ecosystem Because as we know financial systems are not so much about banks and about people and about money They're about laws and about the ecosystem and if this is not right then nothing will develop So the work we're doing with them and the technical level is really about that What do you need in your specific situation to help your market? Develop you probably don't need a CCP But you may need a network of business angels that that kind of discussion I think we have time for a second round of questions So I had been out and a gentleman in the back and the gentleman down the front. So let's and only rain, of course Thank you, I'd like to ask a question on the final part of the presentation by John Burdigan and More specifically on his last His last slide on ICOs. I think that there's a statement there that ICOs I Think you say could serve as a as the basis for the development of a new funding vehicle for innovative startups and scale ups I'd like you to expand a bit on a bit on that so what exactly is the Economical financial purpose that you think ICOs can serve and the other institutions that you I think rightly mentioned as the correct benchmark like Bench capital or crowdfunding cannot add to quickly serve we collect again so We had Bernhardt in the back there Yes, Bernhardt Winkler from the ECB I have three questions the first comes back to the definition of financial structure So why do you define it as equity over bank debt only rather than equity to all credit all debt and that would then better relate to Modigliani Miller a capital structure is the Irrelevance theorem and now irrelevant question mark on the theory side Second question to both of you. Would you liked European financial structure? however, you define it now a liked that to look more like the US or like Germany Now in the US over the last years. We have seen The role of public equity go actually down There's much more equity on taken taken private dark pools and private equity and we have had massive share buyback So actually debt is going up and equity is going down as a ratio whereas in Germany if you look at the middle stand for example 15 years ago the Eigen capital Quote of the German middle stand was three to five percent Which is now 27% so my question to both of you could they break cases where there's too much equity rather Than too little equity and so comment on the US situation which is going clearly to a debt equity swap in the in a very different direction final question on clarification for statistics on Phillips point when you compare debt to equity you actually taken to account that in Europe most equity is not public it's prior it's it's Unquoted shares rather than quoted shares. It is a massive difference to the US and other places a Second point you take out the equity holdings on the asset side of the corporate balance sheet The cross holdings where in the US flow funds actually that is netted out and in the Europe. It is not netted out and finally Wouldn't it be a good idea to take out the evaluation effect because otherwise the Greatest moment for financial structure was the equity bubble in 2000 where equity prices clearly were out of out of kilter And then of course a nominal debt is is is not a mark to market So I think the measure is quite quite open to discussion. I would say otherwise we want to You want to support bubbles and it's a question for both of you in terms of the financial structure. Thank you Okay, I had only rain and then I had one To be careful with time then if you could keep your sorry I should have said that before the last question. I tried to have one concise question Concise So see what all yours global investors There is there was one point I liked because it's not enough mention in my view It's about reorganizing proceedings and credit or participation for further improving insolvency frameworks I say this because we see how Important this is notably in Italy versus Spain for example I think that's also a big driver of the different trajectories of this banking systems so my question is How do you believe Europe can help in this regard because it's a very national Frameworks insolvency frameworks are very national and sometimes like in Italy in my view It's a question also of Financial means because there are not enough churches in some places for example. It's as simple as this so what Yeah, what concretely can Europe do and I think it's a very very good to pick to to bring up in the agenda I Think looking at time because we have also to go to the press briefing or during the break. So let's have quickly a Round of do you want to make start this time? Oh, sorry. I forgot. Sorry. One used to be my boss. Yeah. Yeah. Yeah, sorry Thanks, Philip. Thanks. So I'm already the bank of Finland my question concerns the banking union and its Completion of it should be the priority of the emu reform. I think there is a fairly broad consensus on that at least in the central banking community there is the conditions the roadmap for that especially related to the Risk reduction i.e. the reduction of non-performing loans the legacy problems Now I checked the last night the latest figures from the SSM Concerning Italy which is what we are talking about especially when we talk about the NPS and in Italy the share of NPS has of total total loan stock has gone down from 16 percent to 11 percent around 11 percent in the past six quarters past 18 months and It's gone down from the in terms of absolute amounts from something like 290 to 180 85 billion euros now a Simple question because we need to make progress on the completion of the banking union a Very simple question. I'm going to roam in 10 days. So could you advise me? What should I say there in this regard? is is the glass half empty or half full and Are we meeting the conditions of the roadmap towards the banking union? Okay, we do have to hurry a little bit because we have that press briefing so Let me let me let me make you start again. Okay, John and then you carry on so Whether the glass is empty or the glass is full is usually depends on the perspective of the drinker, right so Now we have the view That the risk reduction has made substantial progress and has reached the stage that it can be matched by appropriate risk-sharing steps and that includes the progress to moving to the next stage of edis in our view and Actually the edis even proposal even offers an opportunity to build in further incentives for risk reduction in terms of the risk sensitivity of the contributions, so One that one means of dealing with these concerns is to build in into the contribution scheme the risk sensitivity Elements that relate to the concerns whether it's NPLs or other other concerns with risk reduction Which would then you know allow to to move forward And actually have this parallelism in risk reduction and risk-sharing I Will not answer all the questions from Bernhardt. I will do it in private all the technical questions, but very very simply Very quick Why bank debt to equity because We have seen significant copper bond market growth. So at this stage I see the issue more on the equity side Then on the on the bond side That's one answer. The second answer is Indeed the data don't allow you to go backwards so much to to actually do the estimations We have the estimations for the ratio for the measure that we have Equity to bank debt because the corporate bond data don't allow you to go back and make the same type of analysis I you know I don't think I need to go to Extremes in terms of what is clear is that we need to develop both the public and the private equity markets along a number of Dimensions in Europe and it is very much depends on which region or country you're talking about it was very clear from John's Presentation so I don't think I have to choose between do I go the US or do I go Germany? As regards the very high equity levels of middle stand I think that one factor here is very peculiar very specific has to do with inheritance. So I'm not sure that That that that this we should hang too much on this on this equity ratios as regards the valuation effects if you I don't pull up the slide again, but That should you can do it with issuance, but then you have shorter time series again But if you look through my charts that I the one chart that I showed but it didn't discuss very much Actually, if you draw the trends through the lines the low equity to capital to bank lending ratio relative to the financial development ratio, then You see that actually the fluctuations in the equity valuations in the in the trend don't play a big role So I don't think that anything of what we said is it has to do with a particular valuation effects Thank you for the remark on reorganization proceedings and creditor Rules credit the participation rules. So I'm glad for the example that helps us you raising this This example, they are not enough judges That is in certain is not only in this country feature. There's not only the number of judges There's also the qualifications of the judges. They did the legal tradition in terms of the qualifications and the cases relative to the number of the courts and and and so on and So John indicated that it's also not a panacea But I would still repeat that there a few countries have actually introduced out of court settlement systems and Have made good experiences some have made good experiences with that. That seems to be possible to go in this direction so I Think that maybe that can partly relieve the the issue of the shortage of the judicial stuffing and and their Qualifications depending on how you design these these two systems these systems and I gave two ways of you would go either non-binding guideline or a more formal EU out of court settlement Settlement regime something that I actually did not mention. Maybe I should have mentioned is That the OECD has done very interesting work on SME procedures actually One issue is that the procedures insolvency frameworks are too heavy for small companies and too costly actually the judicial systems are particular the legal Arrangements are very costly for formal court proceedings and actually by Introducing and there's also a number of countries that actually have introduced them successfully in Europe So actually other countries could follow suit and actually also do as a special lighter SME Related insolvency procedures which may have potentially also have a beneficial effect on the concern that you raised in terms of Overburdened judicial systems. Let me stop here. So Yeah, I'll be very quick On ICOs. I hope I didn't give the impression. I want to displace all the types of funding We are trying to create as many types of different types of financing as we can So in the CMU action plan, we also want to boost venture capital I mean, we were trying this since 2000. We're still trying it We have legislated on crowdfunding to try to allow it to scale up and this will be another possibility So this should be a compliment rather than something that kind of competes and it will create competition and diversification in the market It's a possibility. We have to see how it emerges But I think my main point was that you know There has been a lot of focus on the risks associated with these instruments and there are risks associated with them But we shouldn't lose completely the site of that, you know, if properly managed they can also bring important opportunities on European financial structure I mean these comparisons in the United States and Germany I've been facing these throughout my entire career and they're nice stylistic comparisons they allow you to sort of give stylistic Interpretations, but you know as far as I'm concerned, it's not about whether we you know adopt the German models or we adopt a US model I suspect if we adopt any model like the US and try to superimpose it on Europe won't work If we adopt the German model and try to superimpose it on Europe, it won't work We're going to end up with something that suits Europe because Europe is a collection of many member states And so it's not about having too much equity too little equity It's about diversifying the system and what I will say is that certainly before the crisis We have found that we were too reliant on banks What do we have to do in terms of the represented? I mean I always get this question Am I trying to push banks out of the system? No, I mean I hope the system grows and that we just get a more diversified Structure, but I don't have any particular idea that if we get to 20% we can stop for equity or if we get to you know 30% for debt we can stop. This is not the way. I think we need to think about this on Insolvency frameworks They are very national and we have tried in small measure to change them So in terms of the banking system, we have changed the credit or hierarchy with the BRD We've introduced new debt instruments, which are certainly senior non-preferred Instruments we have more recently put on the table a very modest proposal, which is an out-of-court settlement type of proposal Which would allow more rapid Access to collateral for creditors on a voluntary basis. So on a contractual basis I would sign a contract saying that if I default you would have accelerated access to my collateral and for that You might get a better interest rate, but it's voluntary. It's win-win the member states are I would say lukewarm in their response to this mainly because the people we talked to are not financial stability experts But they tend to be ministers of justice and so when you get into these discussions You face different people. No, so we all understand the financial stability aspects of this But there is not a side which is the sort of social justice side And so you have a very interesting debate and as I've commented many times in the past even when you go in a crisis Situation where you imagine there should be no debate about the financial stability needs of course the social justice pressures also rise because the risk of Dispossession rises as well. So you just end up having the same debate at a much higher level of decibels and Lastly on banking union. I think the issue was not where it's half full or half empty. It is that it's emptying Okay, and why do I say that because I Mean let me be clear what our position is going to be on banking union as we go into June We think banking union needs to be finished Okay, we don't think banking union in its current state is resilient enough to survive another significant shock So we don't have all the time in the world to finish banking union. Am I saying we have to finish it tomorrow? No, but am I saying you can take 25 years to do it? No as well So what I think we're gonna have to do is not get tied up in sort of trigger levels to say if you get to X Then it's okay, but we're going to have to because if we wait for X we may have to wait 25 years So we're going to have to do is be a bit more subtle and say that we look at direction and if the The the direction we're traveling is sufficiently good and sufficiently fast. Then we move But I don't think we have the luxury of waiting until you know We have certain trigger levels of NPLs or certain trigger levels of emerald etc I think we're gonna have to be a little bit more subtle than that And say if we think the the kind of direction of travel is sufficiently fast and in the right direction Then we can move and as Philippa said we think already we've made sufficient progress to move on some parts of the Risk-sharing agenda while accepting that for other parts. We still have a bit of work to do Okay, thank you. I've been urgently need a coffee break now for different reasons so I hope to see you all at 1115 right here for the panels and Stay tuned Many of your questions will be answered then by the panels because we have many experts that will actually dwell on these things. Thank you