 So good morning everyone and it is my pleasure in the name of the ECB and the European Commission to welcome you to this conference that is held every year to present the two reports, one by the ECB and one by the European Commission about financial integration. These are significant reports on a very important subject. This year the conference will concentrate on discussing initiatives that can strengthen the completion of the two projects, the Banking Union and the Capital Markets Union, which are of course fundamental to financial integration. The two reports, you can find many suggestions, recommendations for policy to enhance the financial integration in Europe, which from our point of view as the central bank, it's very important because monetary union benefits from a higher degree of financial integration. You will have also our indicators about the status and development of financial integration. There has been some recovery, increasing financial integration in what regards price indicators, somewhat more doubtful progress in what regards volume indicators of financial integration, but we will see that in one of the presentations. In the reports, you find recommendations to complete Banking Union, introducing some elements of risk sharing, the well-known two elements of deciding on the, on eddies, on the European deposit insurance scheme and also on providing the backstop to the single resolution fund. You find also suggestions about the changes in insolvency laws, both for banks and non-banks in order to harmonize more this aspect of company law, which is important for particularly the capital markets union. You find also in the report by the Commission an interesting chapter analyzing the role of developing local capital markets to the overall project of the capital markets union, and we will have two panels, one dedicated to the obstacles to more integration of retail banking and another one about the role of institutional investors in the capital markets union. So these, of course, will be very importantly preceded by the keynote speech by the Vice President of the Commission, Valdez Dombrovskis, to whom I have the pleasure now to give the floor. Please. Honorable Mr. Vice President, ladies and gentlemen, good morning. It's a pleasure to be here at the European Central Bank for the launch of our annual report on the European financial stability and integration, so thank you for the invitation. Whether in Frankfurt or in Brussels, this event has become something of a spring tradition. It may be not yet as well attended as the raising of the Maybaum or as popular as Paragu Senes Paragu season, but we are working on it. As usual, the ECB is also publishing its high quality report on financial integration today and I welcome its support for our financial integration policies. These two reports come at the right moment. We are less than two months away from the European Council meeting where further integration of European banking and capital markets will dominate the agenda. This is necessary to build the economic and monetary union that is resilient and capable of withstanding future challenges. When it comes to promoting a stable, efficient and truly integrated financial system in the EU, we have two main priorities. To complete the banking union and put in place a capital markets union by next year. So these are the two main topics I will cover in today's speech. Let me first address, however, the economic and broader economic and financial picture. Overall, the European economy is doing well. Last year, both the EU and Euro area grew at the fastest pace in a decade. This was supported by good global growth, structural reforms and macroeconomic policies in member states and low interest rate environment. We expect robust growth to continue this year and next. The solid economic performance translates into tangible benefits for Europeans. Employment is at record levels and unemployment is at lowest level since 2008. Global trends are following suit, however, unevenly. The share of people at risk of poverty or social exclusion is falling. But we will keep our focus on economic growth that leaves no one behind, so on inclusive economic growth. Turning to the financial side, in 2017 we saw an arrowing of corporate bond spreads as investors moved into new and riskier bond segments. EU stock markets moved higher in line with the favorable economic conditions. Earlier this year we saw a spell of high but brief volatility. Looking ahead, the report highlights some risks such as the possibility of a sudden reassessment of risk premium. And there are risks coming from outside Europe, such as geopolitical ones or the sudden call of the protectionism. But on the whole, the financial climate is stable and conductive to growth. All things considered, we can expect 2018 to extend the window of opportunity we need to reform our financial system and put our common currency on a more solid footing. This brings me to the first priority for reform, which is to complete the banking union. As of today, the banking union has two pillars in place and experience shows that they are functioning well. The fiscal supervisory mechanism is in its fourth year of operation, supervising 118 significant banks directly and many more indirectly. And we have a single resolution mechanism which has successfully handled its first EU bank resolution case. But this setup is still incomplete. To manage a banking crisis with the least possible impact on financial stability and taxpayers, we need more. I have always been clear that risk reduction and risk sharing should go hand in hand. One depends on another. Together we had come a long way when it comes to reducing risks in the banking sector. Since the crisis, capital and liquidity have strongly improved, so have governance and supervision. We expect that negotiations on the 2016 banking package should be concluded shortly. And we welcome last December's agreement on the finalization of the Basel III framework. It is essential that all major jurisdictions implement all the key elements of the agreement and we are committed to doing so by following a careful impact assessment. Based on the first exploratory consultation, we have now identified the key issues which we need to look at in more detail. On that basis, we will launch shortly a call for advice to the European Banking Authority. Finally, we have reduced significantly the share of non-performing loans in the EU banking system from 6.7% to 4.4% between fourth quarter of 2014 and third quarter of 2017. In March, we presented a package of measures to help banks further reduce current levels of NPLs and prevent them from building up again in the future. With this package, we have gone further in the risk reduction measures than originally planned in Council's Banking Union roadmap. Today's report shows that the risk reduction effort is also reflected on the ground. In 2017, banks limited their exposure to market risks by reducing bond and derivative portfolios. We see that private credit in the EU continued to recover and performance improved slightly, although profits remain low. Colleges now need to move on the remaining elements of the Banking Union. That entails first of all clear mandate for a workable backstop to the single resolution fund. To be workable, the backstop should satisfy certain criteria. It should be efficient with decision-making that allows resolution to be completed over one weekend. It should provide certainty on the availability of funds within short notice when resolution decisions are taken. It should have sufficient size, and it should be permanent. The second missing element is a European deposit insurance scheme. By pulling resources, one can diversify risks, contribute to a level playing field for European banks, and reduce the likelihood that individual deposit guarantee schemes will fall short. Our ambition is to agree in June on the principles on how EDIS could be introduced in phases. A completed Banking Union would be strongly complemented by a genuine single market in capital. So let me now move to the Capital Markets Union, our flagship project to develop and integrate capital markets across the EU. CMU will diversify sources of finance for European companies, in particular SMEs, who often overly depend on bank funding. In addition, an integrated EU market for capital will help to cushion local financial shocks thanks to cross-border holdings of financial assets. The result will be a system that better supports growth and is more resilient to the future crisis. We can already look back at some important CMU achievements. Two months ago, a new legislation to boost venture capital funds entered into application. We have also adopted an improved prospectus to help companies raise capital more easily on public markets and new rules on simple transparency and standardised secretization. But the CMU is far from complete. Out of 13 legislative proposals tabled so far, 10 are still under discussions by the European Parliament and Member States. At this rate, we would not reach our goal of putting in place the building blocks of CMU before the European elections. So we need determined support from other EU institutions, not least because Europe's largest financial centre is about to leave the single market. By the time of Brexit, the conditions for a true single market for capital need to be in place. We have a three-pillar strategy to put in place the most essential aspects of the capital market union. First, we want new EU-wide financial products for consumers and investors to benefit fully from the single market. For example, we proposed last June a pan-European personal pensions product. It would help Europeans make the most out of their savings and prepare for retirement. I hope that European Parliament and Council will be ready to start negotiations right after the summer. We have also put forward an EU label for covered bonds to give another example. Second, we want more consistent supervision of EU capital markets so that rules are harmonised not only on paper but also in practice. Last fall, we propose to better equip European supervisory authorities to promote supervisory convergence and address new challenges. For example, we want to reinforce decision-making and promote independent reviews of national authorities. Our third and final focus is on simpler and clearer rules for companies to help develop deeper capital markets. With our call for evidence, we identified measures to simplify and reduce regulatory burden on businesses. Ever since this has been a priority for upcoming legislation. For example, later this month we will propose more proportionate rules for SMEs to list and issue on SME gross markets. I would also like to highlight our 2016 proposal on business insolvency to promote preventive restructuring and give viable businesses a second chance. Today's report takes a deeper look at local capital market developments with a special focus of member states in Central, Eastern and South Eastern Europe. In these 11 countries, capital markets remain less developed than in their western peers in terms of both size and liquidity. In fact, these countries account for 20% of EU's population, 8% of EU's GDP and only 3% in terms of capital markets. To create a properly functioning single capital market across the EU, those local markets need to catch up. Because smaller companies often do not have the means to look abroad for financing, they usually turn to local sources of finance. But if SMEs relied disproportionately on financing from local banks, there are also particular at particular risks to shocks to the financial system. So strengthening local capital markets and supporting SME funding goes hand in hand. In addition, national initiatives play a role and we support them, for example, through the Commission's Structural Reform Support Service or SRSS. Important projects are ongoing on capital market strategies, modernization of the business environment and the use of public financial support for capital markets. Finally, we are planning to set out our strategy on local capital market developments in a dedicated communication in a few months. CMU is as much about developing local markets as it's about linking them together across borders. Ladies and gentlemen, I hope that the two reports presented today can serve as a reminder of the work that still needs to be done to complete the banking union and capital markets union. There is lots of stake and we are starting to run out of time. We now expect member states to come together at June European Council and commit to a clear and ambitious pass forward, both on risk sharing and risk reduction. This is a crucial milestone. Technical work is complete on most of the reforms necessary waiting only for political action. The economy is doing well, although no one knows for how much longer. Finally, the European Parliament has only one year left before the next elections. So this year is an admissible opportunity for reform and I hope we will say this. Thank you very much. Senior NSEQ is a big European bank. And do you think it will be a risk to establish a stability and profile and market relationship? To that side, that's my question. Okay, I was trying to follow the question so as I understand it was on resolution and BRD and the 2016 banking package, senior NSEQ Berlin, well, on Berlin instruments. Of course, we know that we have our 2016 banking package, which normally should provide the response for this question by setting up a TILAC and emerald, which are exactly the bail-in-able buffers and set them also as a rule, as a benchmark, comparable with a 8% requirement, which is also in BRD as regards bail-in requirements in case of bank resolution. So that's where we need to arrive. And that's where we are currently, that's what we are currently working on. Of course, there is still some transition period between now and time when banks will build up a TILAC and emerald, when of course we'll need to look at issues. Should they arise, I would say, one by one in line with the current practices. Other questions? Isabel? So, Isabel Schnabel, University of Bonn. Can you say a bit more about your idea about the design of the fiscal backstop of the single resolution fund? Yeah, as regards the backstop for a single resolution fund, there is a broad agreement among finance ministers. The issue has been discussed several times in Eurogroups, in ecofins, in different formats, that European stability mechanism could provide that backstop. So that's the basis on which you are currently working. And as I said, this technical work is already advanced. So what we need now is basically a political decision and then to move towards the implementation on the basis of ESM. Is there a third question? Michael? Hi, Michael Haliasos from Goethe University. I wanted to ask you to emphasise a lot SMEs, of course. I wanted to ask how seriously is CMU taking households and the ability of households to invest across borders? Well, actually, in CMU we take households' savings very seriously. I was mentioning some of examples like pan-European personal pensions product is, of course, primarily addressed at households. And sometime ago we also adopted a retail financial services action plan, which was exactly to look at the obstacles for efficient functioning of cross-border retail financial services. So I'd say households are certainly an important part of the capital markets union and the main idea is to put European savings to productive use towards investments in our economy. Another question. We still have good time. Thank you. Giovanni Sabattini from Italian Banking Association. To get out of the A-discrete lock, don't you think that it would be sufficient to complete Banking Union a simple network of national DGS with refinancing agreement without aiming at a full-fledged A-disc? Well, on this indeed, well, it has been sometimes since A-disc proposal is being discussed and we had seen little progress both in council and in European Parliament. So last autumn we came with a way to introduce EDIS in a more gradual way. So what we basically set out some ideas that one could start with liquidity support only without entering into loss mutualization, discuss, which would be then the stage one, and discuss conditions. How do we move from stage one to stage two, which would imply increased loss mutualization. But the end ambition from the European Commission side is in any case 100% European system, so fully-fledged EDIS. So we're not giving up the end destination. What we are proposing is how to arrive there in a more gradual way. So if there is another one. Thank you. Thank you, Mr President. One question about PEP. Could we use PEP also to foster equity investment by the household savings and retail investors to make sure that we can also, you know, put money into that primary market, which is very important for economic growth as well, and equity turns out to be in this low interest rate environment a very good investment for long term. Well, when we set out our PEP proposal, it doesn't prevent equity investment. Well, the issue there is that of course as a pension product, so it's how to be, if you want, conservative, low risk product, so one has to pay strong attention. What is a quality of assets in which pension funds are investing, but equity is certainly a possibility. And in a sense what we propose that potential customers, buyers of this Pan-European personal pension product would also have several options. The default, so to say, is the lowest risk one, but they could also go for more dynamic investment strategies, which of course at the end of the day all how to be prudent strategies, but there would be also a certain choice for potential investors into this project. What kind of strategies they want to follow for their pension savings.