##b are well aware of the role played by the exchange rate as a source of external shocks in the euro area and as an important link in the monetary transmission mechanism. movements in the euro ’ s exchange rate are duly taken into account in the ecb ’ s economic analysis of the short to medium - term risks to price stability. there is therefore no reason to be concerned that the ecb is neglecting the implications of exchange rate developments for the euro area economy. in this context, there are, however, a couple of issues that need to be borne in mind. it is important to note that, with the introduction of the single currency, the importance of the exchange rate for the cost and price competitiveness of an individual euro area country has declined significantly. nowadays, more than 50 % of the euro area countries ’ external trade is with other euro area trading partners and is therefore not affected by exchange rate developments. changes in the euro ’ s exchange rate therefore have a much smaller effect on a country ’ s competitiveness than changes in the exchange rate of that country ’ s former national currency prior to the adoption of the single currency. furthermore, people often overlook the fact that a strong currency also has beneficial effects. it reduces the price of imported consumer goods, thereby boosting the purchasing power of consumers. a strong euro also lowers the price of imported production inputs, such as crude oil, which are denominated in us dollars in the world market and may, therefore, even have a favourable impact on the price competitiveness of the euro area economies. does the euro area need an economic government? i have argued that it does not. the institutional framework established by the maastricht treaty provides for effective and efficient monetary and economic governance for the euro area. if all decision - makers act in accordance with their mandates, this will implicitly give rise to a policy mix that is beneficial to growth, employment and prosperity.

and innovation held at the ecb two years ago, we established that despite the financial crisis, the retail payments business has been resilient, providing reliable and regular revenues. before the crisis, the fact that the retail payments business is a substantial source of revenue in banking, accounting for up to 25 % of total bank revenues, was often neglected. now, the observation that banks with a balanced business model have been in a better position to cope with the crisis has led to a better recognition of the importance of retail banking and retail payments. still, despite their resilience and stable nature, retail payments revenues cannot be taken for granted. they are under pressure from different directions : increasing competition, substantial investment needs to keep up with customer demands and technological progress, and a more decisive stance on the part of competition authorities. with regard to the pricing of payment products, payment service providers have to face the paradox that on the one hand, they are being pressurised to ensure more price transparency, and on the other, direct pricing would probably result in an increase in pricing that would neither be accepted by the customers nor by the regulators. the financial crisis has not only led to a better recognition of the importance of retail banking and retail payments : it has also sharpened the focus on banking governance. in recent years, many banks were giving increasing priority to the interests of the shareholders. consequently, it can be argued that the interests of the clients, and thereby of society as a whole, slipped too much into the background. in short, the public service function of banks, which is particularly relevant in the field of payments and loans, has been neglected. now, it is time for me to hand over to the panellists. i am interested to hear your views on the key issues relating to the transformation process of the banking business, in particular as regards retail payments. what are the prerequisites for and barriers to successful integration in the field of retail banking and payments? what does an efficient retail payments market look like? which governance models are appropriate to steer the retail payments market? bis central bankers ’ speeches