At the same time, greater global interconnectedness will continue to necessitate substantial efforts towards enhanced international cooperation. I will mention a number of priority issues in this context. BIS Review 86/2008  1  The state of European financial integration Let me begin with a brief review of the current state of European financial integration. Completing the single financial market is a key priority on the European economic agenda for a number of reasons. First, an integrated financial market is a prerequisite for realising the full economic potential of Europe, as highlighted in the Lisbon strategy. A study by London Economics estimates that the integration of the European bond and equity markets could result in additional GDP growth of around 1% over a ten-year period, or approximately 100 billion euro. 1 Second, financial integration is also a crucial element in the safe and efficient functioning of the monetary union. In particular, financial markets that are more integrated provide strong support for the effective transmission of the single monetary policy and the smooth operation of the underlying payment systems. By enhancing the depth and liquidity of financial markets, integration also enhances the resilience of the European financial system. The ECB has, therefore, always been a strong supporter of the European financial integration process and we have monitored the respective developments very closely. Based on a set of quantitative indicators, we review the state of financial integration in the money, bond, equity and banking markets in our annual report on Financial Integration in Europe.

These include especially the adequate involvement of all relevant host authorities; a coordinating role for the home country supervisor, with due respect to the responsibilities of host authorities; and arrangements – to be devised by the EU committees of supervisors established under the Lamfalussy approach – to foster consistent procedures and policies across different supervisory colleges. Lastly, closer ongoing cooperation should be pursued not only between supervisors, but also between supervisors and central banks. Such joint work, to be pursued at all levels (nationally, regionally and globally), would in particular aim to enhance the integration of supervisors’ micro-prudential functions and central banks’ macro-prudential functions in the assessment of possible financial risks and vulnerabilities. This would make a significant contribution to raising awareness of emerging financial system imbalances at an earlier stage and devising effectively coordinated public sector action to address them. Furthermore, given the growing role of correspondent and custodian banks in payment and settlement systems, closer cooperation between supervisors and central banks, in their role as overseers, is increasingly important to ensure a comprehensive and consistent treatment of the respective financial risks. Conclusion Mesdames et Messieurs, permettez-moi de conclure mon intervention. La mise en place d’un marché des capitaux européen sûr, efficient et totalement intégré est une contribution essentielle que l’Europe peut apporter dans le cadre d’un processus harmonieux de mondialisation financière. Des progrès significatifs ont déjà été réalisés dans ce domaine, mais de nouvelles avancées doivent être réalisées.