willem f duisenberg : 175 anniversary of the bank of the netherlands antilles speech by dr willem f duisenberg, president of the european central bank, on the occasion of the 175 anniversary of the bank of the netherlands antilles in willemstad, curacao, netherlands antilles, 4 february 2003. * * * introduction your excellencies, mr. tromp, ladies and gentlemen, it is a great honour and pleasure for me to speak to you here just two days before the actual day 175 years ago, on which johannes van den bosch, the dutch commissioner - general for the dutch west - indian possessions, signed the proclamation on a statute for the curacao bank, as the bank van de nederlandse antillen was initially called. the history of this bank and that of the central bank i presided over for 16 years, namely de nederlandsche bank, are largely comparable. the charter of de nederlandsche bank was used as the basis for the statute of the curacao bank, as there was no comparable financial institution anywhere in the caribbean region or latin america at that time. thus, the curacao bank could truly be considered a pioneer in this part of the world. both banks were founded with the active support of king william i, with the aim of promoting trade and of reforming the fragmented currency system prevailing in the netherlands and in curacao and dependencies, as the netherlands antilles and aruba were called at the time. also, both were set up as commercial credit banks, a function that they have maintained until the middle of the 20th century, when they were formally transformed into central banks with sole responsibility for monetary policy and banking supervision as well as other central bank - related tasks. for a very long time now, and from the different positions i have held, i have closely followed economic and financial developments in the netherlands antilles and the key role played by the bank van de nederlandse antillen in this regard. please allow me to use this opportunity to underscore that this is also the case, albeit from a somewhat different perspective, in my current position. for a major central bank like the european central bank ( ecb ), the broad trends in economic and financial developments in latin america and the caribbean do matter and are, therefore, followed closely. in its short history, several initiatives have thus been taken by the ecb to build up relations with this region. among these were a seminar held last year for eurosystem and latin american central

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 fragmentation was affecting the whole economy of the area, and a banking union has been proposed in order to re - establish a smooth transmission of monetary policy and ensure that the credit supply meets the real economy ’ s needs. some evidence on the fragmentation of the banking system first of all, let me give you some evidence on the fragmentation of the banking system. bis central bankers ’ speeches the ecb has been continuously monitoring the degree of integration in the euro area financial markets. the latest financial integration in europe report, published in april 2012, showed several indicators pointing to rising fragmentation in various market segments as the sovereign debt crisis has escalated. in addition to the price - based indicators highlighted in the report, quantity - based indicators also continue to point to a further and significant renationalisation of euro area banks ’ funding markets. banks located in peripheral countries continued to lose market funding, while those in some other countries retained it and managed to issue bank debt at attractive yield levels. the market for secured bank funding has also been affected by the increased tensions in some euro area government bond markets. differences between bank lending rates offered to non - financial corporations and households in euro area countries reflect divergences in bank funding conditions that go beyond country - specific economic conditions. let me give you a few examples. the coefficient of variation across euro area countries of the short - term cost of borrowing for non - financial corporations has been increasing towards all - time highs. also, in some countries retail lending rates have increased markedly, while policy rates have decreased. since mid - 2011, the rate charged by the ecb on its main refinancing operations has decreased by 75 basis points but the composite cost of borrowing has decreased by a similar or greater amount in only 20 % of cases. in another 20 % of cases, it has even increased by more than 25 basis points. the dispersion of lending rates has risen both across jurisdictions and across categories of enterprises. for example, the cost of short - term borrowing for corporates in france is still around the same level as that recorded at the beginning of 2011 ; by contrast, in italy, over the same period of time, the cost of