jean - claude trichet : introductory remarks at the signing ceremony for the t2s memorandum of understanding speech by mr jean - claude trichet, president of the european central bank, at the signing ceremony for the t2s memorandum of understanding, frankfurt, 16 july 2009. * * * dear ladies and gentlemen, we are gathered here today to mark the signing of a memorandum of understanding on t2s between the eurosystem and the csds of europe for the next stage of the t2s project. t2s will create a single european, borderless, settlement platform, offering highly secure delivery versus payment for the settlement of securities, using central bank money. by combining cash and securities settlements in one shared platform, it will create a single pool of securities available to market users through their chosen csd, irrespective of the location of the issuer, the security or the settlement counterparty. as a result, cross - border transactions will become as simple as domestic ones. through economies of scale, the cost of settlement on both a domestic and cross - border basis will be substantially reduced. like an airport servicing various airlines, t2s will provide a basic public infrastructure that can be leveraged by csds to offer, for example, a mix of value - added products and services to their customers. by creating a single pool of securities that is accessible from any csd regardless of its location, it will naturally lead to more competition in the settlement industry, more transparent and efficient pricing, and create new opportunities for cross - border trading venues. on top of this – and this has moved more to the forefront in recent months – through its reduced liquidity needs and its operational robustness, t2s will also contribute to the stability of the financial system. overall, this dynamic process is likely to create substantial gains for the european financial industry. furthermore, by helping to overcome the fragmentation in the european market for securities settlement, t2s reinforces many other european union initiatives, such as the code of conduct for clearing and settlement, the giovannini harmonisation process and of course the mifid directive. in this way, t2s helps to drive forward the single market objectives set out by the lisbon agenda. today ’ s signing of the memorandum of understanding, which sets out the mutual obligations of the eurosystem and csds, brings us another step closer towards realising this goal. the presence here of settlement houses operating not only in the euro area but also from

announced an end to quantitative easing and markets started to price in first increases of boj interest rate. this may expose some emerging markets, which have weak fundamentals to a change in investors ’ sentiment, may lead to the depreciation of local em currencies and a significant drop in market liquidity. 11 some risks are also related to the changing structure of our financial markets. since the second half of 2004, the liquidity of offshore spot zloty market has increased significantly and average daily turnover reached almost usd 1 billion. in addition, high nominal values of single transactions between non - residents contribute to a segmentation of the zloty foreign exchange market. this phenomenon is even more visible in the case of the zloty option market. at the same time the consolidation of the polish banking sector, transfer of treasury operations to parent banks and very limited amount of polish banks ’ capital, which determines the scope of risk they can take, limits the liquidity of the domestic market. in the future, financial market for instruments denominated in zlotys could become even more segmented and therefore less effective in absorbing different kinds of risks. 12 this process will accelerate with our accession to the eurozone. experience of some emu members, e. g. finland, indicates that emu membership will be accompanied by a visible contraction of the domestic market. 13 the introduction of the euro will change banks ’ internal organisation of risk and liquidity management. treasury activities will be centralised on a multi - country group level and proprietary trading will be transferred abroad to head offices. this process might be accelerated by the already observed transformation of subsidiaries into branches of foreign banks. domestic outlook let me turn to domestic outlook of the polish economy. the nbp projection released in april - which assumes unchanged interest rates at 4 percent - points to economic growth within the range of 4. 5 to 5. 5 percent in the years 2006 - 2008 and inflation gradually returning to 2. 5 percent target sometime in 2008. the statement issued after the april monetary policy meeting stated, and i quote 14 : “ the council maintains its assessment that with large probability inflation will in 2006 q2 and maybe q3 remain below the inflation target mainly due to short - term factors. if the developments in the economy were consistent with the april nbp inflation projection, then the current level of the reference rate of the central bank would support a gradual return of inflation to the target over the projection horizon and would also be condu