If the function adds value even under such a scenario, then it will be retained, but if not, then the house concerned sees no long-term future for it. I think the challenge facing financial markets and market participants is to identify where they can add value and which services the consumer will continue to pay for: not all will pass the test and survive. My third theme combines both my earlier ones, and concerns the role of market intermediaries. Disintermediation is an ugly word, but it is a trend that exists today and will I am sure continue to grow in importance. Electronic secondary trading of securities is becoming more common, and we have also begun to see electronic primary distribution - the issuance of securities on the Internet, and, in some cases, without the involvement of an issuing house. Now some people see in this a threat to markets themselves: everything, they fear, will migrate to the web and fragment, with a loss of the BIS Review 15/2000  2  transparency and regulatory framework that organised and official markets provide. I do not share this view, nor do I think that there is no future role for markets and market intermediaries. But I do think that the marketplace of 10 years hence will be very different from the one we have now - just as the screen-based markets of today are very different from the physical market floors of the past. Earlier I offered you a possible motto for central bankers.
In any case, such reforms are a necessary foundation for dynamic and sustainable growth in the future and they must be vigorously pursued. There is no doubt that the euro area as a whole will benefit from these national reforms that represent a significant asset for us in the global economy. 2.2. The challenge for the banking system: continuing to ensure that the economy is properly financed while strengthening the financial sector  The dilemma here is easy to understand: on the one hand, it is absolutely necessary to strengthen banks’ balance sheets to enable them to better absorb shocks, protect public finances and re-establish normal market functioning. On the other, a disorderly deleveraging would create enormous problems and add credit constraints to the many headwinds currently facing our economies. The euro area is currently making sure that these two objectives – although sometimes difficult to reconcile – are achieved. Banks are meeting their new capital requirements. The capital plans submitted to the European Banking Authority (EBA) indicate an intention to exceed the benchmarks set by  2  BIS central bankers’ speeches  more than 20%. French banks already comply with the Basel 2.5 regulations. At the same time, bank lending seems to be stabilizing, although at a relatively low level. Banks are starting to assess their financial situation more positively and in many cases their willingness to grant loans is increasing. This would not have been possible without the strong support of the Eurosystem.