This means that each country should adopt the standards stemming from the Acquis Communautaire and different international codes (Basle’s II) combined with energetic steps in improving economy, society, culture and environment as well. I think this is a MUST for promoting financial market efficiency in the entire Region.” Allow me to summarize financial system in the region along the following characteristics: -  The system is dominated by commercial banks. Financial intermediation role of the other financial institutions is weak. The insurance industry in most countries of the region is quite small and underdeveloped. Traditionally poor governance, inadequate risk management practices and lack of consumer confidence have limited total assets held by these institutions, in the same time limiting to some extent the possibility to present a source of systemic risk to the financial sector. However this sector’s rapid expansion in some countries including Albania calls for the development of an adequate legal framework for conducting insurance business and the strengthening of the supervisory framework. Other financial intermediation such as leasing activities have grown sharply in the last years (Serbia, Bosnia and Herzegovina) representing an important source of funding source for fixed investment and for small and medium-size enterprises. Micro credit institutions have a significant presence in Bosnia and Herzegovina, being mostly established with donor funds but over the last years having shifted their funding source toward bank loans. Consolidation into larger credit unions would be a viable method to be able to offer larger loans and provide more banking-like services.

But there are still issues and concerns about the real extent of changes in lending standards and the potential problems that rapid credit growth might pose if the global economy were to turn to a slower gear. Similarly, Asian banking systems remain relatively close to the participation of foreign banking, as compared to other emerging market regions, a development which may be foregoing important benefits in terms of modernization and competition. All in all, I would conclude that the financial sector in Asia is still lagging behind when compared to other very dynamic and exemplary sectors in the region, such as certain industries, education and technology. I believe that this imbalance may eventually become a drag for the consolidation of a sustained growth path. Therefore, the development of the financial system is of central importance for the long-term growth perspectives. Under these circumstances, banking reform and restructuring is an important challenge that many Asian economies are inclined to face. Let me tell you that in Spain we know well this challenge and its rewards. The highly successful performance of the Spanish economy over the past 20 years cannot be explained without taking into account the significant contribution by the financial sector and, in particular, by the banking system. In turn, the transformation – and improvement – of our banking system in this period has been outstanding. This is evidenced, for example, by its favourable performance in terms of profitability, efficiency and solvency, both on an absolute basis and in comparison with other countries.