as regards europe, oecd, economic survey of the euro area 2009. body. the second avenue would be to assign new competences to the escb or to a body close to the ecb. these may well be medium - term solutions, and take some time to be implemented, but it might be useful to think along these lines in order to move towards a stronger european supervisory framework. the pros and cons of the various models have been examined thoroughly in the literature. 3 the discussion has sometimes bordered on the doctrinal, if not dogmatic. but pragmatism is the key. after all, even within countries there have been changes over time, in one direction or another. in all likelihood, there is no perfect system. even the us is currently considering changes to its supervisory framework, and there are concrete proposals on the table. i can misquote keynes and say that when the facts or circumstances change or when new information emerges, i can change my mind. indeed, i have partly changed my mind in the light of experience. let me share with you some of these reflections. i won ’ t go into all the pros and cons of the various models, but just make a few observations. in the 1990s, the trend was to separate prudential supervision from central banking. it was thought that the conduct of monetary policy would be “ polluted ” by prudential supervision considerations. the temptation to try to help some banks with monetary policy tools would be greater if the central bank exercised prudential competences. on the other hand, given that supervisory powers are closer to the political authorities and that ultimately taxpayers may step in to prop up a failing bank, the governing body of the institution conducting both monetary policy and prudential supervision would risk being more exposed to political pressures. this would undermine the independence of the central bank. furthermore, the negative reputation effects of unsuccessful supervision can undermine the credibility of the central bank and its monetary policy. this has happened in the past, although it has mainly affected central banks which were not fully independent. these arguments have been developed in the literature, and in fact were examined in a book written by daniel gros and myself in 2000. 4 recently i read a couple of other reasons for not entrusting the ecb / eurosystem with supervisory tasks. the first is that conferring direct micro - prudential supervision responsibility would considerably reinforce the powers and influence of the ecb, which

##a ) – an endeavour that required substantial efforts by all stakeholders. that initiative consisted of two key stages. first of all, a harmonised legal framework was needed for payment services in the eu. thus, the payment services directive ( psd ) was adopted in 2007 and entered into force in 2009. second, it was important to ensure that consumers and businesses in the eu could send payments to each other quickly and easily across borders, with no differences between domestic and non - domestic payments. the sepa credit transfer and sepa direct debit schemes replaced all domestic payment schemes in the euro area, using fully interoperable global standards. catering for innovation in the current age of rapid technological progress, it is vital to ensure that innovation delivered by banks and non - banks reaches all european citizens. innovative bespoke national solutions using 1 / 4 bis central bankers'speeches national – or, more frequently, non - european – technology could threaten the integration achieved by the various sepa schemes. innovation may start at domestic level, but it should not face barriers preventing pan - european expansion. thus, national solutions should provide for pan - european reach in their initial design. as these solutions tend to be provided by non - banks or disseminated by local banks on behalf of non - european entities, third - party providers need regulated access to payment accounts. the revised payment services directive ( psd2 ), which is currently in the process of being implemented, will provide secure and interoperable payment account access and will allow innovative new payment services to be provided in the eu. what we don ’ t need is integration with non - european countries that runs counter to european standards. while legislation is indispensable for an integrated market and to promote innovation, it is not the only precondition. cooperation between stakeholders is also essential in order to ensure smooth and harmonised processes throughout the eu. the ecb has brought the market together, initially via the sepa council and then via the euro retail payments board ( erpb ). the erpb was instrumental in the development of the sepa instant credit transfer scheme, which is now live, with over 1, 000 providers participating. those instant payments have been achieved without legislation, with the ecb instead facilitating dialogue and consensus between market actors. moreover, that scheme will soon be complemented by the ecb ’ s new target instant payment settlement service, which is set to go live this november, providing a real - time, high - end