jean - claude trichet : towards the review of the lamfalussy approach – market developments, supervisory challenges and institutional arrangements keynote speech by mr jean - claude trichet, president of the european central bank, at the first cebs conference, london, 9 may 2007. * * * ladies and gentlemen, it is a great pleasure for me to be here today at the first conference of the committee of european banking supervisors ( cebs ) and to share with you some thoughts at this particular time when market developments are underscoring the importance of making rapid progress towards a convergent supervisory framework. not least, this time is also appropriate for such an exchange of views given the upcoming assessment of the functioning of the lamfalussy approach. let me begin by recalling that the ecb has been a strong supporter of the lamfalussy approach from the outset, i. e. since 2001, when this new institutional framework for financial regulation and supervision was first introduced. we also welcomed the extension of the approach to all financial sectors with a view to reaping the expected benefits, across the entire financial system, of more flexible and transparent legislative procedures and greater regulatory and supervisory convergence and cooperation. since then, the ecb has been closely monitoring the efforts to enhance the eu framework for banking supervision. it is now time, as the cebs completes more than three years of successful operation, to take a step back to evaluate the progress that has been made and to identify the key issues on the way forward. i will organise my remarks in three parts. in the first, i will analyse some developments in the eu banking sector with a particular focus on integration and cross - border banking activities. i will then review the main objectives and related challenges for the supervisory framework in relation to these market developments. finally, i will assess the progress achieved with the supervisory responses so far and point to some elements of the way forward. developments in the eu banking sector among the many developments in the eu banking sector over the past few years, i would like to highlight two, given their relevance for the supervisory framework. first, the process of financial integration has advanced more slowly in the banking sector than in other segments of the financial system, namely the money, bond and equity markets. this is also supported by the findings of the ecb ’ s report on “ financial integration in europe ”, which we published for the first time at the end of march. the evidence presented in the report shows in particular that the retail

to enhance supervisory convergence and cooperation, initiative and commitment on the part of the banking groups themselves is indispensable for making progress in the future. i would just recall in this context as an example that adequate group - wide tools and procedures for risk management and the effective dissemination of relevant information within a group are basic prerequisites for streamlined supervisory action. the experience of the cebs consultative panel and public consultations characterised by an active involvement of market participants indicates that there is a strong will on the part of the industry to contribute to the success of the supervisory efforts. conclusions let me briefly conclude. the cebs has made significant progress so far and this has been acknowledged and appreciated by all interested parties, including the ecb and the eurosystem. the work of the cebs has laid the foundation for a supervisory framework in the eu which should be able to promote on the one hand further banking and financial integration and at the same time maintain its effectiveness in pursuing financial stability in a more integrated financial system. the full success of the framework established by the cebs should not be taken for granted. it will depend on the continuous improvement of several factors including further possible progress in the decision - making process of the cebs, a sustained high degree of commitment on the part its members and the necessary constructive role of market participants. thank you very much for your attention.