One major obstacle to the efficient functioning of financial markets is also the prevailing segmentation of financial markets in Europe. So, while the introduction of the single currency was a major step towards integration, the high degree of segmentation in Europe’s securities markets remains one of the primary reasons for structural weaknesses.
It begs the question of whether a policy system should merely aspire to become resilient to shocks or whether it should seek to adapt or transform to preempt shocks in the first place. Let me illustrate this point with a concrete example.