europe, the eurosystem decided to migrate from target as a system of systems, to a single shared platform, target2, where the rules of the different legal systems are harmonised to the greatest possible extent. let me now say a few words on the second of these ecb initiatives : the so - called ccbm ( correspondent central banking model ). as you know, all eurosystem credit operations have to be adequately collateralised by eligible assets. moreover, the eurosystem's operational framework stipulates that counterparties can only obtain credit from the national central bank in the country in which they are located, and that any eurosystem counterparty should be able to use any eligible asset as collateral. thus, a specific mechanism had to be established to enable the cross - border use of collateral, regardless of the location of the asset or the counterparty. against this background, the eurosystem introduced the ccbm in 1999 in parallel with target. through the ccbm, counterparties obtain credit from their " home central bank " based on collateral provided to another eurosystem central bank and this " correspondent central bank " holds the collateral on behalf of the home central bank. in the current framework for the delivery of collateral, the ccbm provides for a common cross - border procedure, while national collateral delivery procedures are still not harmonised. the ccbm has proved to be a success, as the cross - border use of collateral has increased significantly. however, market participants have found some drawbacks in this system which mainly relate to the lack of standardisation of existing procedures, both domestically and at cross - border level. against this background, the governing council decided in march 2007 to review the current eurosystem collateral handling procedures. in july 2008, it has decided to launch a single technical platform – called ccbm2 – and assigned the development and operation of ccbm2 to the national bank of belgium and de nederlandsche bank. ccbm2 will first and foremost provide a harmonised level of service, thus facilitating interaction between the eurosystem central banks and their counterparties. while the ccbm was built for the cross - border use of collateral only, ccbm2 will provide a single set of uniform procedures both on a domestic and a cross - border basis. ccbm2 will handle all eligible collateral, marketable as well non marketable. it will consequently allow to manage securities but also incorporate functions for the use of credit claims as collateral. furthermore,

aware that spill - over effects and contagion increase with financial integration. so, it will probably be a major challenge in the coming years to accurately gauge this dimension, as borne out by the growing importance of cross - border financial institutions. in recent weeks, when the financial turbulence was at its fiercest, it became clear that a revamp of prudential supervision in europe will be an essential element of the reforms necessary to avoid a repetition of such a dramatic turmoil. finally, by encouraging more efficient allocation of resources, financial integration acts as a prerequisite for realising europe's full economic potential, that is raising the potential for stronger non - inflationary economic growth, as highlighted in the lisbon strategy. for all these reasons, the eurosystem has always been a strong supporter of the european financial integration process and we have monitored developments in the different segments very closely. the tenth anniversary of the ecb, a few months ago, gave us the opportunity to take stock of the achievements in european financial integration over the last decade. we were proud to conclude that significant progress has been made and that the single currency has acted as a major driving force. the progress that has been achieved nevertheless differs across market segments. the money market, in particular the interbank market for unsecured deposits, can be considered as a single area - wide market – also its current difficulties ignore national borders! but the segment for short - term debt securities ( commercial paper and certificates of deposit ) is still fragmented. i would like to remind you that, in order to try and close this gap, the eurosystem is supporting the private step initiative which aims to develop a pan - european short - term paper market. a considerable degree of integration has also been achieved in corporate bond and equity markets. by contrast, while the euro - area banking markets for wholesale and capital - marketrelated activities also show clear signs of integration, retail banking markets have so far remained fragmented. undoubtedly, the euro - area government bond market is the segment – apart from the unsecured money market – that has reached the highest degree of integration. the removal of exchange rate risks, the drop in transaction costs and the disappearance of currency restrictions for investors and intermediaries have pushed up cross - border bond holdings. let me mention the case of my own country. at the end of june this year, the proportion of belgian linear bonds held by foreigners reached 55 p. c. in the case of treasury certificates, foreign holdership came