AMSE | Aix-Marseille School of Economics Marseille, 11 December 2018  Speech by Denis Beau First Deputy Governor  “Trends in financial intermediation and implications for the regulation and supervision of the European financial sector”  1/9  Ladies and Gentlemen, dear students, It’s a pleasure to be at the Aix-Marseille School of Economics today to discuss the trends affecting a key channel of the financing of the real economy: financial intermediation. This topic is well chosen the year of the tenth anniversary of both Lehman bankruptcy and Nakamoto’s paper underlying the Bitcoin. This is not just a coincidence. For crypto-assets’ proponents, the “old world” of bank-centric financial intermediation failed in 2008 and had to be replaced by disintermediated peer-to-peer systems like Bitcoin. Where do we stand now? Central bankers, regulators and supervisors have worked to strengthen the traditional bank centric model of intermediation, and the highly intensive finalisation of Basel III has concluded ten years of regulatory efforts in that field. Banks are stronger and more resilient than before 2008. At the same time, quite ironically, the Bitcoin itself has generated the biggest bubble ever, which is now bursting. So, in 2018, are there new developments in financial intermediation? Yes, indeed. A number of factors contribute to push the European bank-centric model towards a more diversified, unbundled financial intermediation model. Hence, I will focus the first part of my presentation on those drivers and their impact on financial intermediation (I).
Prior to the most recent informal meeting of the finance ministers and central bank governors in the EU, which took place in Oviedo in Spain, a working group had studied the conditions for speeding up financial integration. This group made a review of the important welfare functions of the financial system and referred to the profits that an efficient financial sector can generate. They also illustrated some of the obstacles that remain within  3  the EU and which I have just mentioned. On the basis of its analysis, the group drew conclusions on what measures from the public sector could contribute to realising the political ambitions within the EU. The finance ministers and central bank governors of the EU member states endorsed the group’s conclusions. They thus emphasise once again that the 42 measures in the financial services action plan must indeed be implemented in the member states no later than 2005, in a way that opens up markets but does not create new obstacles to integration. Public supervision of financial activities needs to become more uniform within the EU, to enable operators with financial activities in several countries to be covered by similar conditions and to facilitate co-operation between the national supervisory authorities. Competition within the financial sector should be intensified, and in particular different financial operators should be afforded equal access to clearing and settlement systems. Furthermore, existing elements of tax discrimination should be identified and removed.