mojmir hampl : european integration – a critical economist ’ s view speech by mr mojmir hampl, vice - governor of the czech national bank, at the europe at sixty : 1949 – 2009, metropolitan university, prague, 20 november 2009. * * * ladies and gentlemen, let me first express my deep gratitude to the organisers for inviting me to give this keynote speech today. and do not take it as a standard, politically correct opening sentence. i really mean it. for me it is quite a rare opportunity to speak frankly and openly on such an important topic, which the process of european integration certainly is, and to speak more as a scholar than a policy - maker. so i will try to do my best and to be outspoken enough to provoke questions and comments after i finish. therefore, the usual disclaimer is more relevant than ever this time : my opinions are not necessarily the opinions of my employer. i think european integration is a process that provides a lot of food for thought for many social scientists. i will try to approach the topic from the point of view of an economist, but also a citizen and a mere mortal, sharing with you some of my concerns as to how the process of european integration has been evolving so far and where it is most likely heading. these concerns are supported by the fact that as a member of the eu ’ s economic and financial committee, i can watch the integration process every day on - line as an insider, so to say. the title of this conference stresses the fact that european integration started 60 years ago. you know that exactly 60 years ago a completely different project, originally aimed to build up something “ brand new ”, also appeared quite far away from europe – in china. what irony of fate that after these sixty years it is now the chinese who seem to be on their way up, running fast, while the european union is stagnating or even descending economically. what bitterness, when one realises that on its way up, china is still a desperate and crazy communist regime that has just allowed its citizens a bit more freedom in the area of economic life. of course, a part of the explanation lies in the fact of simple economic convergence. but without any doubt, the eu is losing its momentum. not just now, in the crisis ; this is a longer process. in the eu it seems to me that we have started concentrating more on conservation or preservation of the existing wealth, rather than on wealth creation.

have recently expanded the originate - to - distribute model, and, in terms of profit, have been increasingly relying on the fee business and the trading business. japanese financial institutions, mainly the major banks, have been strengthening investment banking and asset management businesses. however, deposit preference in the household sector has been deeply rooted, and the pattern that financial institutions using their deposits as a source of loans and investments, mainly in government bonds, has not changed much. as a result, while the ratio of borrowing from financial institutions to firms ’ aggregate funding except for stocks is about 20 percent in the united states, that ratio reaches 50 percent in japan. also from that point, you can see that the flow of funds through deposits and lending in japan is still dominant. second, in terms of transaction relationship between financial institutions and customers, while financial institutions are gradually shifting to focus on the profitability of individual transactions, the stance of building a long - term stable business relationship based on overall profitability appears to persist. such focus on the long - term transaction relationship is by no means unique to japanese financial institutions, and is also observed in u. s. regional banks. however, in the united states, such business relationship with customers seems to have been changing with the expansion of securitized markets. in addition, in the area of small firm lending, small business loans that simplify the screening process have increased mainly in major u. s. banks. that can also be considered as an expansion of lending business that is not based on the long - term customer relationship. also in japan, the long - term relationship between financial institutions and customers once called a main - bank system has been gradually waning and transactions that attach importance to individual profitability have been emphasized. small business loans were also once actively used in japan. financial institutions have come to provide fine - tuned services to depositors according to their outstanding amount of deposits and the frequency of the use of services, and have not necessarily consider their profitability in the context of long - term transaction relationship. however, such changes in the transaction relationship proceed only gradually and it appears that the financial institutions ’ basic stance of pursuing the long - term stable transaction relationship with customers has not changed substantially. for example, the practice of cross - shareholdings between financial institutions and large firms still remains, albeit declining in size. it seems that the regional financial institutions have also been focusing on the long - term transaction relationship with local firms as in the past. third, in terms of