market liquidity and the opportunity for risk sharing. the bond market ’ s depth has recently increased to 11 trillion dollar, outnumbering the size of euro area ’ s gdp. admittedly, the corporate bond market in the euro area is still substantially smaller than in the us, as european firms traditionally rely more on bank financing. however, firms on this side of the atlantic increasingly make use of debt securities. between 1998 and 2006, the value of outstanding bonds in terms of gdp has doubled, while it increased “ merely ” 60 percent in the us 4. more efficient and deeper financial markets benefit companies through lower borrowing costs. the challenges for emu as we speak, the euro area is undergoing an upturn. economic figures have been better than expected. in 2006, gdp grew by 2. 9 percent, outstripping the united states for the first time in 5 years. unemployment has fallen to 7. 5 percent in 2006, the lowest level in 15 years. while the recovery reflects a cyclical upswing, these figures also suggest that structural reforms in the past are starting to pay off. however, as henry kissinger once said : “ each success only buys an admission ticket to a more difficult problem ”. monetary union ’ s problem is twofold : weak public finances and subdued per - capita - income growth. things have improved, but i am convinced we can do much better. without aiming to be exhaustive, i will mention a few steps that enable countries to tackle these issues and to further capitalise on the advantages of the single currency. creating sustainable fiscal positions a first challenge will be to bring public finances on a sustainable footing. in periods of buoyant revenue growth, there is often a tendency to overestimate the strength of the underlying budgetary position. that is partially because economists can only tell you tomorrow why things predicted yesterday didn ’ t happen today. if spending is allowed to increase on a structural basis, but higher revenues turn out to be transitory, the budgetary position starts to deteriorate as soon as economic conditions turn nasty. this was exactly the mistake made by some countries in the beginning of this decade. let ’ s not repeat that mistake. countries with sizeable deficits and public debts should use the current windfall in tax revenues to consolidate. sound public finances are also crucial for dealing with the costs due to population ageing. while living longer is good news, public expenditures in the euro area are projected to increase by up to 10 percent

to further integration. fortunately, the right initiatives are underway. it already started in 2001, with the regulation on cross border payments in euro. better known as the bolkestein regulation. this regulation paved the way for the single euro payments area. an ambitious initiative, where european citizens should by 2010 be able to make payments throughout the euro area from their bank account as easily and safely as in their own country today. by creating a pan - european infrastructure and identical payment tools, all payments in the euro area essentially become domestic payments. 15 years ago this goal was beyond imagination. now it appears within reach. concluding remarks to conclude, the euro has seen a number of successes : the introduction of a new currency for more than 310 million people, price stability, low interest rates and progress in the integration of the goods and financial markets. these achievements are remarkable, as they have been realised in a short period of time and in a unique political context. indeed, europe is the world ’ s laboratory : we created the first supranational entity based on a sense of solidarity rather than coercion. of course it is not all plain sailing. in the fields of public finances and the internal market work remains to be done to reap the full benefits of the euro. it is therefore important to remain ambitious in the near future. not ambitious to be, but ambitious to do. how monetary union will evolve in the future is hard to predict. but if the past 8 years offer a compass for the future, i am optimistic we find the right answers to our current challenges. g. tumpel - gugerell ( 2007 ), the competitiveness of european financial markets : an economic framework for effective policy making, speech at washington economic policy conference, 12 march 2007.