participating countries will lose their feel for prices established and trained since childhood. they will have to learn to live with the new currency. in the beginning, consumers will behave as if they were on a trip abroad and will continuously convert prices into the familiar old currency. since the irrevocably fixed conversion rates are crooked numbers, they will normally not convert exactly. but for customers to be able to retrain their feel for prices, they need the help of retailers and banks in the form of a dual display of prices. in surveys, consumers have repeatedly voiced concern that the changeover to the new currency will be taken as an opportunity by retailers to raise prices. this holds true for the popular signal prices like dm0. 49 or dm1. 99, for example, by which a clean price threshold is avoided. owing to the crooked conversion rate, the conversion will result in crooked prices. but adjustments cannot be avoided for even prices, either. market surveys have found that prices will go down by 5 % at least in the creation of new signal prices. consumers thus do not generally have to fear rises in prices – but there are always exceptions. the currency conversion thus is a question of adequate information. this problem has been recognised at both the european and national levels, and several measures to inform the public have been initiated. the european commission has assumed a pivotal role here. it initiated the following steps through several recommendations : • for example, the commission issued a recommendation concerning the dual display of prices and other monetary amounts which is applicable up to the end of 2001. consumers should be able to slowly become accustomed to the euro prices and to gain a feel for prices so that conversion scopes in signal prices and adjustments of even prices cannot be exploited by retailers. this will create more transparency, and customers can ascertain that nothing has become more expensive as a result of monetary union. the commission called upon the respective associations to implement its recommendation. for the dual display of prices, it proposed a minimum standard for the exactness of the prices. retailers are also to indicate clearly whether they are prepared to accept payments in euro during the transitional period. • another recommendation by the commission specifically addresses the fees charged by banks for the conversion of the euro. accordingly, banks should follow a standard of good practice. in addition to converting national currencies into euro free of charge at the end of the transition period, it was recommended that banks envisage the conversion of “ household amounts ” of banknotes

##mediating between those with surplus resources ( depositors ) and those in need of resources ( investors ). in view of the foregoing, effective and efficient supervision is crucial to limit the risk of loss to depositors, henceforth maintaining public confidence in the financial system. in response to the liberalised environment, there has been a proliferation of linkages between institutions operating in various segments of the financial sector and a growing number of financial mergers and acquisitions, thus creating, in the process, huge financial conglomerates. for instance, banks and insurance companies are searching for growth through the diversification of their activities in such a way that they can no longer be considered as homogeneous institutions falling within the scope of one economic sector and one supervisory system! these conglomerates aim to exploit the synergies that exist among banking, insurance and investment. this market evolution towards huge financial conglomerates, with integrated product development is slowly blurring the traditional boundaries between banks and non - bank financial institutions, on the one hand, and the supervision of these institutions, on the other. in spite of these trends in the international financial markets, regrettably, supervisory systems, in our sub - region, are mainly structured along the traditional boundaries demarcating banks, insurance companies, investment and micro - finance institutions. these integration changes represent major challenges to the supervisors of the different sectors, especially as the financial institutions become more complex in their structures and operations. notwithstanding the foregoing, the sluggish growth of our economies in the sub - region has also created a difficult operating environment for financial institutions, especially banks. as a result, this has contributed to the mushrooming of non - bank financial institutions, such as, micro - finance. it is a fact that the financial sector in our sub - region is dominated by commercial banks, which have continued to service only a small section of the population. the majority of the people are denied access, largely, due to numerous reasons, including perceived risks, high costs involved in dealing in small transactions and the inability to provide marketable collateral for loans. it is against this background that financial sector supervision should also be directed at financial institutions that pose the greatest risks, such as, non - bank financial institutions. in this regard, the adoption of the risk - based approach allows the supervisor to devote more supervisory effort to those areas that have a high - risk profile. this therefore, entails that supervisory authorities should shift their focus from the traditional capital, assets, management, earnings, liquidity