If the EU-27 financial markets deepen, diversify and expand across borders, there is a clear flipside: these developments will need to be accompanied by sufficient oversight and tools to avoid the build-up of risks in certain parts of the system.
That is why, in my speech yesterday, 3 I called for the macroprudential toolkit to be expanded to address potential risks around interconnection, liquidity, leverage and cross-border activities of non-bank financial institutions – in particular, investment funds. I also argued that we should consider elevating the responsibility for supervising these institutions, and potentially activating macroprudential tools, to the European level.