This entails the EU Parliament and Council providing framework directives on issues of principle, while the Commission chisels out the details in follow-up directives and regulations. After this, a group of representatives of the countries' different supervisory authorities will adapt the interpretations of these directives. This plan can be regarded as a building stone of the Lisbon Strategy - the ambitious target set at the summit meeting in Lisbon in March 2000 - which aims to make the European economies “the world’s most competitive and dynamic knowledge-driven economy by 2010”. An admirable ambition, although it could possibly have been worded more modestly. 4  BIS Review 66/2004  Harmonising regulations and strengthening competitive advantage in the European economies is a commendable aim. Increased harmonisation simplifies price comparisons and thereby strengthens competition between producers of financial services. If these producers also become competitive internationally, there will be benefits for both domestic consumers and shareholders in these countries. I nevertheless wish to say a few words of warning. While harmonisation that is achieved through regulations can promote competitiveness in the short term, it can also cause concern in the slightly longer term. When all participants have to follow the joint regulations, it makes competition in the dynamic sense more difficult. This is not the idea behind the Lamfalussy Process. We often forget that regulations may also need to be subject to competition in order to become efficient.

This includes the closer linking of the stock markets in Stockholm, Helsinki, Tallinn and Riga through the establishment of OMX and - prior to this - the stock markets in Amsterdam, Brussels, Lisbon and Paris through EuroNext. An example of far-reaching integration in the clearing and settlement of securities transactions is Euroclear. The agreement on a merger of the Swedish and Finnish central securities depositories is another example of tendencies towards integration in the securities market. Understanding developments in the securities markets and what these in turn mean for the future requires an understanding of the economic driving forces behind them. Today I shall discuss some long-term trends that I consider of particular importance. These include changes in the population structure, the demography; technological developments; internationalisation; changes in ownership structure and - as I mentioned at the beginning - changes in what we usually refer to as the financial infrastructure. This refers to the financial markets' railways and bridges; all of the systems that enable financial transactions to be made and the data regarding them to be transported as efficiently as possible, for instance, stock markets, clearing and settlement systems. In addition to these economic driving forces, regulations play an important role for developments in the financial markets. Later on, the Director General of Finansinspektionen (the Swedish Financial Supervisory Authority), Ingrid Bonde, will give her views on the new EU regulations that are about to be introduced. I shall also touch upon this work and comment from the Riksbank’s perspective.