Second, the recently agreed Bank Recovery and Resolution Directive (BRRD), which sets common EU rules including on state support for banks in resolution but allows for national flexibility in their application, aligned to national insolvency regimes, by national resolution authorities or in the Banking Union’s case, the new Single Resolution Board. Like CRD4, the BRRD reinforces financial stability by ensuring that the actions of national resolution authorities are recognised in other member states. I would single out another aspect of the BRRD. It follows the international standard for resolution developed by the Financial Stability Board – the “Key Attributes of Effective Resolution Regimes for Financial Institutions”. There is a more general point here. The EU capital market and financial sector exists in a globally integrated market. It is in our economic interest for the EU to be as integrated as possible with that global market. As I have said, that market needs to be supported by properly implemented international standards. The EU and its member states need to play an active role in shaping those standards. And once international standards have been agreed, it is in the EU’s interest that it implements them – as in the BRRD. This is of crucial importance to the UK and to the UK’s financial stability. The UK is the home to financial firms and infrastructure that are truly global in their reach and activity. While much  BIS central bankers’ speeches  3  of this activity involves the EU, a very large amount does not.
It is one that does not generally exist elsewhere within the single market. There are other examples. The general point however is that it is possible to find where necessary the balance between financial stability and the single market and the EU has, by and large, been able to do so. I hope and expect this will continue as we move into the next phase of the development of the single market – what has now become known as the Capital Markets Union and to which I now want to turn. Capital Markets Union The motivation to create a single, integrated, capital market in the EU is not new. As I have noted, the potential benefits to economic growth and “dynamism” at a time when growth in Europe was sluggish drove the efforts in the 1980s to liberalise capital accounts and create the single market in financial services. The reforms inspired in the 1990s by the Giovannini report aimed to create an integrated, well-functioning financial market to “help the EU economy by encouraging the right investments to be made in the right places” and so to “contribute to higher economic growth and employment.” And we should not under-estimate what has been achieved. To take one example, the UCITS regime launched then and refined over the years has enabled the growth of EU investment funds, operating with a passport across member states, with nearly € trillion of assets.