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Cœuré also argues that the current low levels of financial integration in the euro area are inefficient, and that, as a response, there is need to intensify efforts if tangible progress in completing banking union and creating a true capital markets union (CMU) should be achieved.
The ECB official briefly touches on the ongoing reform of interest rate benchmarks, which is essential to safeguard the smooth transmission of monetary policy and the resilience of the financial system.
Mr Cœuré concludes that further analysis of the appropriate fallbacks for EURIBOR, and the ways to implement them, is required. This includes the need to make decisions on trade-offs between international comparability, consistency across products and availability for use. He is sure ISDA will continue to play a vital role in finding such solutions for the euro area.
The reform of interest rate benchmarks comes at a time when more far-reaching and encompassing reforms to European capital markets are needed to promote integration, strengthen investment and boost private risk sharing.
Cœuré says: “The United Kingdom’s departure from the EU reinforces the urgency with which we should pursue policies that address barriers to capital market integration in Europe and eliminate opportunities for regulatory arbitrage. More integrated capital markets will support the transmission of the single monetary policy and increase its resilience in periods of stress. Advancing CMU should therefore be a top priority for the new European Commission and Parliament.”