3. 2 advising on the legislative and regulatory framework for the financial system as we see it, the basic task of public authorities with regard to the process of financial integration is to create a framework whereby, generally speaking, all potential market participants in a given financial instruments or services market, are subject to a single set of rules when they decide to deal with those financial instruments or services, have equal access to this set of financial instruments or services and are treated equally when they operate in the market. the eurosystem is fully committed to this principle of integrating financial markets and the financial system as whole, both in the euro area and the european union. we are committed to it both because it is required by european law and because we think it is good for the economy of the euro area and the european union, and for the best possible functioning of the level playing field in this sector. in line with this commitment, we also advise on the legislative and regulatory framework for the financial system. let me give you a few examples. very recently, at the start of august, the eurosystem provided an opinion in response to the european commission ’ s consultation on the priorities for financial services policies over the next five years. 5 as detailed in our opinion, the eurosystem supports the key policy orientation of the green paper, in particular the proposal for “ better regulation ” based on open, transparent and evidence - based policy - making, and the need to focus on the consolidation and consistent implementation of the legislative framework for financial services. to this end, we are of the view that the potential of the lamfalussy framework should be exploited as far as possible. in this respect, let me also recall the position expressed earlier this year by the eurosystem in relation to the review of the so - called lamfalussy process. 6 with regard to the supervisory framework, the eurosystem fully supports the commission ’ s view that the current institutional set - up should be exploited to the maximum extent before any potential structural change is considered. in particular, the eurosystem agrees that the main policy objective in the area of financial supervision is twofold : first, to enhance the competitiveness of eu financial markets and institutions and to facilitate the development of cross - border finance both in terms of institutions and in terms of products and services ; and second, to ensure the effectiveness of standards for oversight and supervision in a more integrated financial system. london economics, “ the costs and benefits of integration of eu mortgage markets

account deficit in recent years was partly caused by negative real after tax deposit rates. if we are not to see distortions in the economy, therefore, any policy rate path has to balance these interests – in other words, be a goldilocks rate path which is neither too high nor too low. of course, banks stand partially in between borrowers and lenders, and to transmit rate reductions they should be able to cut both borrowing as well as lending rates. concerns have been expressed about government small savings schemes that pay a high rate to households, making banks reluctant to cut their own deposit rates for fear of being disintermediated. while government small savings rates should be readjusted more frequently to market rates, the growth of these schemes is small for the most part, and at least for now these schemes should not be an insuperable barrier to transmission. second, because of a large divergence between wpi and cpi, some economists have argued there is a difference between the real rates manufacturers face and the real rates savers get. i am sympathetic to the argument, but believe the only way to tackle it is to get inflation of all kinds down – so long as the divergence between inflation in traded goods and in non - traded services is large, the problem will not go away. but i also think the concern is overblown. even if manufacturers do not have much pricing power because of global competition, their commodity suppliers have even less. so a metal producer benefits from the fall in coal and ore prices, even though they may not get as high a realization on sales as in the past. the true measure of inflation for them is the inflation in their profits, which is likely greater than suggested by wpi. so the real interest rate they face is lower than that obtained by subtracting wpi from the nominal interest rate. third, i have said in the past that the central bank is not a “ cheerleader ” for the economy. by this i did not mean that the rbi does not want to do its utmost to see the economy do well. far from it! what i meant is that it is not the role of the central bank to elevate sentiments unduly, to deliver booster shots to the stock market so that it can soar for a while, only to collapse when reality hits. we do not have to look too far beyond our borders to see the consequences of such boosterism. rate cuts should not be seen as good