of these questions are likely to be no. policy actions are needed as i have tried to illustrate so far, financial integration gives rise to several challenges related to the supervision of cross - border banks. most importantly, i have argued that the present supervisory arrangements are not designed to prevent the cross - border externalities that financial crises may result in. this, of course, is a growing problem in an integrated world. furthermore, i have argued that there are deficiencies in how the supervision of internationally active banks works in practice, which can partly be explained by limitations in legislation and partly by supervisors not being sufficiently coordinated. in my opinion all this gives us good reasons to reflect on how to take actions for revising the present regulatory frameworks. we need to find ways for countries to cooperate closely and establish mechanisms for coordination and conflict resolution. motives for a coordinated financial supervision most of what i have said so far is probably pretty uncontroversial both in terms of the analysis of the challenges of integration and of the need for action. however, it may be more difficult to reach agreement on how to move forward. a number of alternative solutions have been brought into the debate. for example, proposals such as prohibiting foreign branches from doing business domestically or extending home - country responsibility have been discussed. my take on this, as i said in the beginning, is instead to gradually move towards the creation of a common international body with a mandate to conduct supervision of banks with substantial cross - border activities. the simple rationale is that the creation of such a body is the only way to fully manage the conflicting national interests. also, such a body would have several other benefits. a single authority supervising cross - border banking groups instead of several would most certainly increase the comprehensiveness and the effectiveness of the supervision. for the firms subject to supervision, it could mean that the regulatory burden would eventually be reduced considerably. in a european context, the idea of a european organisation for financial supervision ( eofs ) may at a first glance seem overly idealistic, and to be honest, in some respects it is. one can argue that it would be virtually impossible to make countries give up parts of their sovereignty to a supranational authority. however, looking at this from a european perspective, there is hope. within the european union there is already a framework for supervisory and regulatory cooperation, based on the common legislative process in the form of eec - directives and regulations. moreover some institutional arrangements for supervisory cooperation are

has strengthened the links between nordic, baltic and american exchanges. the driving force behind this merger is primarily economic in that it confers considerable economies of scale. clearing involves balancing mutual claims and liabilities. settlement involves the transfer of money and securities between transacting parties. the changes in securities markets are also connected with regulations. the eu directive mifid aims to strengthen competition, improve client protection and promote the integration of the european securities markets. the directive has paved the way for new types of trading facilities in europe. 2 a reasonable assumption against this background is that the map for share trading in europe will be re - drawn. share trading will be channelled to the market places that offer the best rates and the lowest tariffs, which signifies good liquidity. distinct tendencies are also present in the clearing and settlement of securities transactions – the processing that follows a trade as such. an example of far - reaching integration in this field is euroclear, which settles securities transactions in five markets in europe and recently acquired sweden ’ s central securities depository ( vpc ab ). euroclear ’ s new system will be able to settle cross - border securities transactions just as smoothly as national transactions are settled today. alongside market solutions, the european central bank is working on a completely new system for linking up the national systems for securities settlement. in recent years, moreover, clearing services provided by central counterparties are being used to a growing extent. the role of central counterparties is a topical issue in the united states as well as in europe, not least because the global financial crisis has highlighted the advantages. more about that later. a number of central counterparties are already operating in europe in clearing of derivatives as well as of shares and interest - bearing securities. in sweden there is a central counterparty – nasdaq omx derivatives markets – for derivative instruments that are traded on omx. there was until recently no central counterparty for spot transactions in swedish shares and interest - bearing securities. with the creation of new trading facilities in europe, however, clearance of swedish shares through a central counterparty is now possible. 3 in october it was announced that a central counterparty service will also be provided in future for spot share transactions on omx nordic exchange stockholm. the tendencies i have just mentioned indicate an explosive development. what will be its consequences for the swedish financial infrastructure? the swedish systems will indeed be wholly or partly replaced by or linked up with systems elsewhere. this means that to a growing extent,