Our interest in bank funding, as central bankers, stems also from the fact that it touches upon the very essence of our respective mandates. Money, remember, is the liability of the banking system. Central bank money represents but a fraction of broad money. To ensure that money is sound, and, in the euro area, that it is “single”, we need the banking system to be equally sound, and importantly, single. It is against this background that I will devote my remarks tonight to the latest development in European policy, specifically the decision to proceed with a banking union to complement monetary union in the euro area. I will discuss the desirable components of a banking union, towards which a single supervisory mechanism represents the first step. The establishment of a banking union is a key factor in the completion of monetary union, and probably a turning point in the current crisis, with profound repercussions for the financial sector and the real economy alike. Over the past few years, the mounting pressures in funding markets have led to a growing fragmentation of the banking system of the euro area along national lines. Links between banks and sovereigns have grown tighter, and in some countries the credit supply has been negatively affected. The conduct of a single monetary policy has become increasingly difficult as the transmission channels have become heterogeneous.
This report comes at an opportune time as there have been growing concerns that terrorist groups are using the pandemic outbreak to advance their propaganda and fundraising efforts. Although the risk seems muted at the moment due to strengthened border enforcement, online activities and financial transactions related to terrorism could easily go under the radar of authorities. This bolsters the continuous need to better understand and profile key players involved in the furtherance of terrorism financing activities. I believe that the typology report and also discussion during this Workshop will help us to close gaps and reduce our blind spots. As we progress, financial crimes will continue to evolve and take on more complex forms. As such, we should remind ourselves to not let our guards down. The fight against terrorism is a shared battle and it must always be our collective priority. This can only be successfully conquered through the sharing of information between members. Conclusion As we face unprecedented times, we are bound to encounter unknown challenges. Thus, there is a need for all of us to stay prepared, agile and responsive in facing those threats. Collaboration amongst us, through sharing of information and experience, will further strengthen our collective readiness to address the ML/TF risks. I note that a diverse mix of participants including from the private sectors have registered for the Workshop which will no doubt enrich the discourse this week.