Successful economies need stable and sustainable macroeconomic frameworks and sound monetary policy that delivers low, stable and predictable inflation. Well-regulated financial systems and well-functioning markets are prerequisites for managing the challenges that lie ahead. In the EU, the completion of Banking Union and further developing the Capital Markets Union are important next steps.
Many of these arrangements also have direct and indirect financial or operational linkages and, absent strong risk controls, can themselves be a source of contagion in times of stress. Thus, it is critical that systemically important systems and activities be subject to strong and consistent prudential standards designed to ensure the identification and sound management of credit, liquidity, and operational risks.