the budget, and for its direct effects on the international competitiveness of the euro area. competitiveness includes, among others, increasing the flexibility of the labor and product markets and creating a more efficient tax system that encourages job creation. as a stable anchor for europe the euro contributes to the stability of the international financial system. as the financial system is crucial in the allocation of resources by channeling funds from households to enterprises, an economic environment in which these functions can be fulfilled smoothly and efficiently is essential for the welfare of an economy. financial markets can only work smoothly and efficiently if they can rely on a complementary legal and regulatory infrastructure. thus, the economic integration of financial markets has to be accompanied by the necessary adoptions of regulatory frameworks and regimes. in today ’ s globalized world there is no doubt about the importance of a strong and well - regulated financial sector. the crises that have swept a number of emerging markets in recent years indicate the dangers that a weak financial sector poses to economic stability. therefore, the international community has set a range of initiatives to strengthen the international financial architecture. after all, global financial stability needs to be promoted through both national action and enhanced international cooperation. in the international arena, the imf has played a central role in the effort to establish internationally accepted standards and codes as " rules of the game " for the global economy. the imf and the world bank have worked together with central bankers and regulators to develop the " financial sector assessment program " as a systematic way to identify weaknesses and sources of vulnerability in national financial sectors. it is designed to help countries to enhance their resilience to crises and cross - border contagion, and to foster growth, by promoting financial system soundness and financial sector diversity. austria has declared its interest to participate in this program and will thus have its financial sector systematically monitored with respect to its resilience to shocks. let me next turn to the debate about the european regulatory framework. by abolishing national boundaries and harmonizing different legislations, european integration has fostered the development of a single financial market in europe. the introduction of the euro, the single monetary policy, the existence of a single payment area all have undoubtedly accelerated and reinforced the process of financial market integration and structural change as well as the growing process of european financial and banking integration. however, in the recent past the speed of integration has slowed down. as a case in point, all those structural factors that the eurosystem some time ago identified as

fiscal union. indeed, the example of the u. s. a. – which is not a perfect optimal currency area either – suggests that most of the interregional risksharing necessary in a common currency area takes place via financial markets and not via friedrich august von hayek. 1988. the fatal conceit : the errors of socialism. university of chicago press. 76. https : / / cor. europa. eu / en / engage / studies / documents / addressing - brain - drain / addressing - brain - drain. pdf seite 4 von 6 budgetary transfers. still, the eu budget is dwarfed by the u. s. federal budget. and moreover, fiscal flows lead and facilitate financial flows – not least via safe assets – and thus add a qualitative component to their quantitative contribution to risk - sharing. whatever the outcome of this debate, the development and integration of financial markets is the order of the day, both in emu and in cesee. without neglecting the important role of banking in providing finance, particularly to medium - sized businesses, it will be crucial to deepen capital markets. to improve the role of financial supervision, euro candidate countries in cesee have been encouraged to consider joining the single supervisory mechanism ( ssm ) at an early stage. while the oenb stands ready to help develop financial markets in cesee, we also have a cautiously affirmative stance on further emu enlargement. when drawing lessons from the socalled euro area sovereign debt crisis, we can say that euro introduction arguably went too fast, but that dismantling or retrenching emu now would be extremely costly. for new euro area candidates, this means that even if the treaty obliges all eu members to introduce the euro at some stage, they must fulfill the maastricht criteria in a sustainable manner before being able to adopt the euro. additionally, given that emu has changed since the crisis, candidates are expected to enter the ssm before introducing the euro. on the other hand, we must recognize that there is no “ one size fits all ” approach to how soon countries should give up their independent monetary policy – a decisive macroeconomic tool – in favor of joining monetary union. also, public support for such a move differs across cesee countries although it has become increasingly favorable. ladies and gentlemen, let me conclude. one message that i have tried to convey is that despite a number of setbacks, high costs and