euro area countries, germany seems to be against withdrawing the €500 note as the germans are used to paying cash. is that a problem? some people, especially in germany, are anxious about the disappearance of cash payments, which for them represent an element of personal freedom. it ’ s a legitimate argument and i want to reassure them that it ’ s not about getting rid of banknotes in general ; the discussion is only about the €500 note. where are the €500 notes? in which countries? there ’ s a lot of talk about russia … we reckon that at least 20 % of the notes in circulation, by value, are held outside the euro area, the majority in denominations from €50 to €500. most of these notes can be found in the euro area ’ s neighbouring countries, especially in eastern europe and russia. technically, there could be a monetary policy advantage for the ecb if it decided to withdraw the €500 note. those who have it could in fact exchange it for banknotes in another currency, which would automatically push down the value of the single currency. could that be a factor in its withdrawal? no, this discussion has nothing to do with monetary policy. bis central bankers ’ speeches

is thus a strong incentive to lobby the political sphere to reduce legislation and regulation, in a somewhat vicious circle. the less regulated is the sector, the more profitable it will be, the more resources it will in turn have to lobby and thus the more likely it will be to succeed in influencing the legislator. furthermore, the more unregulated is the sector, the more innovative it can be, creating complicated instruments and vehicles that the legislator will hardly understand and thus will have difficulties in regulating. the legislator will need to consult market participants when preparing legislation, and these occasions are effectively used to water down or reject proposals. as an example, when one looks at the recommendations contained in the april fsf report, they hardly look controversial and one might wonder why they hadn ’ t been adopted before. the answer seems to be that the financial industry opposed them until now and lobbied strong enough to avoid that they became legislation. another source of conflict of interest derives from the international dimension of finance and the rapid mobility of products and factors of production in this sector. in such a context, there is an incentive to reduce the level of regulation compared to other countries in order to attract the financial industry from neighbours. given the high value added that financial industry generates and the negative correlation between regulation and profitability, the incentive to compete on regulatory standards is much stronger than in other sectors, especially for countries which have put the financial sector at the centre of their economic policy priorities. experience shows that national legislators are tempted to lower standards also for the protection of savers, for instance in terms of deposit protection or bankruptcy laws, in order to attract financial industry. given the complexity of financial instruments and practices and the asymmetry of information inherent in the financial industry, the savers, i. e. citizens, i. e. the taxpayers, are bound to find out that their interests have been given a lesser importance compared to those of the financial industry only when the crisis erupts. the problem exists not only at the international level but also within the single european financial market. national regulators deliberately want to maintain a substantial leeway in transposing european directives into national rules. it has long been contended by some that such a leeway was healthy, because it allowed for competition and therefore avoided overregulation. some progress in regulatory convergence has been achieved in recent years, in particular within the lamfalussy framework, but clearly not enough. the proposal for a single rulebook of regulation has been