jean - claude trichet : enhancing the eu regulatory and supervisory framework – the eurosystem ’ s perspective speech by mr jean - claude trichet, president of the european central bank, at the 2007 eurofi conference “ achieving the integration of european financial markets in a global context ”, european parliament, brussels, 3 december 2007. * * * ladies and gentlemen, it is a great pleasure for me to introduce the discussion on the eu regulatory and supervisory framework at this year ’ s eurofi conference. the issue is particularly topical at the present juncture for two reasons. first, a wide range of eu institutions and fora are contributing to the first full review of the functioning of the lamfalussy approach across financial sectors in view of a discussion on the matter by the ecofin council. second, the recent financial market turbulence has underscored, among other things, the importance of effective cross - border cooperation and information - sharing among the competent authorities. the eurosystem which has strongly supported the lamfalussy approach from its inception and has actively contributed to its development during the past years also intends to contribute to the review process. it will publish its formal assessment – focusing on the banking sector – within the coming days and therefore i would like to take today the opportunity to share with you a number of issues which i judge important. basic premises underlying the eurosystem ’ s assessment let me start with the two basic premises underlying the eurosystem ’ s assessment. the first premise relates to the main challenges for the eu regulatory and supervisory framework, namely the need to promote further progress in the single market and, at the same time, safeguard financial stability in an increasingly interdependent financial system at eu and international level. the eurosystem is convinced that the eu framework will effectively meet these challenges only if divergences in supervisory requirements and practices are reduced to a minimum. at the same time, there is a need to ensure effective and timely informationsharing and cooperation among the competent authorities. while in recent years we have undoubtedly seen very good progress in these areas, it is also clear that the level of crossborder cooperation and convergence attained is not yet sufficient. moreover, structural developments – notably the increasing prominence of cross - border activities and institutions in the eu banking markets and the growing level of functional integration of cross - border groups – highlight that there is no room for complacency, and that further progress in crossborder convergence and cooperation is of the essence.

the second premise underlying the eurosystem ’ s position relates to the choice of an adequate institutional vehicle to foster the heightened degree of supervisory convergence and cooperation. the eurosystem remains convinced that the lamfalussy framework provides an appropriate setting in this respect. one of the key advantages of the lamfalussy approach is the combination of a decentralised set - up with cross - border coordination at eu level. a decentralised approach is in line with the national responsibilities for safeguarding financial stability – relating not only to prudential supervision, but also to financial stability monitoring and assessment, crisis management, and deposit insurance – while also allowing to reap the benefits of geographical proximity and of the established experience and knowledge of local supervisors. however, the accompanying coordinating mechanisms need to be sufficiently strong so as to achieve the required high level of cross - border convergence and cooperation and to ensure a level playing field. we consider that the eu regulatory and supervisory policy process has not yet been sufficiently strengthened in this respect. to this avail, further measures will be necessary at all levels of the policy process, pertaining to ( i ) the overall institutional setting and political guidance for the pursuit of cross - border convergence and cooperation ; ( ii ) the eu regulatory framework, as laid down at levels 1 and 2 of the lamfalussy process, ( iii ) closely convergent supervisory requirements, as developed at level 3 of the lamfalussy process and ( iv ) streamlined and consistent supervisory processes, as implemented by national supervisors on a day - to - day basis with the support of the level 3 committees. three key issues for enhancement the eurosystem ’ s views on the required measures within these four broad areas are broadly in line with the respective recommendations of other eu institutions and fora, such as the european commission, the inter - institutional monitoring group, the financial services committee, and the committee of european banking supervisors ( cebs ). i would like now to briefly highlight three key issues on which we place particular importance. first, one priority in the coming period will be to reinforce the role and operating mechanisms of the cebs. the current status of the cebs – a private network of national supervisors with a limited formal recognition at either eu or national level – is simply not commensurate with the important tasks entrusted to this committee. the institutional standing of the cebs should therefore be enhanced significantly. against this background we very much support the commission ’ s plans to assess possible options for strengthening the