Moreover, the Covid pandemic has once again highlighted the unfinished agenda of increasing the growth potential across Europe, completing the European banking union and the need to break the interconnectedness between governments, the domestic banking sector and nonfinancial corporates. Additional measures are needed to develop the European Capital Markets Union and facilitate private risk-sharing.
Finally, the EU can play a leading role in supporting the transformation of the financial system. With the Sustainable Finance Strategy, Europe is leading the way, for example with the development of a green taxonomy and incorporating climate risks into prudential regulation and stress testing.