fund sector to significantly disrupt the smooth functioning of the financial system. this of course calls for an adequate regulatory and supervisory framework so as to avoid the vulnerabilities to materialise in the future. we therefore welcome from the financial stability point of view the project of the european commission to provide a new prudential framework for insurance companies to which the ceiops is currently contributing. 3. the role of ceiops 3. 1 general consideration on the state of achievement of the internal market in the different financial sectors let me now turn to the current regulatory and supervisory framework at the european level. more specifically, today i would like to make some reflections : first about the existing differences in the eu regulatory framework among financial sectors ; second, on the lamfalussy framework and the specific work carried by ceiops in the insurance sector ; thirdly, on cross - sectoral issues. i will start with the remark that the pace of the harmonisation process had a different speed among the three sectors. although the general principles enshrining the internal market for financial services, namely the mutual recognition and the home state control as basis for the european passport, have been common to all the three sectors, the level of community - wide harmonisation has been different. this was due to both historical and political reasons. for the banking sector the role and contribution of the basel committee which provided an internationally accepted common framework is to be acknowledged. as we all know, the european capital adequacy rules for banks – which in the eu are also applied to investment firms – draws largely on the basel framework. to also note that the recent revision of the basel accord had prompted the review of the european prudential framework, and the new capital requirements directive has been adopted in a quite short time considering the technical complexities involved. the committee of european banking supervisors ( cebs ) is now working on a number of projects related to the implementation of the new regime. in the securities sector the pace of regulatory harmonisation accelerated thanks to the political impetus given for the completion of the ambitious agenda laid down by in the financial services action plan ( fsap ). also the committee of european securities regulators ( cesr ) has been very effective in helping the commission to settle difficult technical issues. with the adoption of the remaining level 2 measures for the mifid and the transparency directive, a brand new regulatory framework will be in place. the fsap was initially less focused on other financial sectors, such

reformed and is now witnessing growth coming back faster than expected – even though the unemployment rate is still very high. can ’ t we ask for extra time for some countries in terms of their fiscal adjustment policies? the stability and growth pact does in fact include some room to manœuvre in terms of fiscal adjustment and these margins must be used. more generally the euro area ’ s difficult economic situation demands that all growth levers be activated : the monetary lever, of which the ecb is in charge, the fiscal lever for countries which have the possibility to use it, and the structural reform lever. these three levers are complementary and the most important one is that of reform. this was the meaning behind mario draghi ’ s speech in august in jackson hole. supporting a country ’ s supply capacity means re - creating fiscal resources and providing fiscal room to manœuvre in order to, for example, reduce taxes on modest households. we cannot expect miracles of fiscal “ flexibility ”. first, the stability and growth pact text speaks of “ major structural reform ” the cost of which has to be quantifiable. then this cannot affect the goal of fiscal balance which is not one of europe ’ s inventions but which is inevitable to prevent debt from spiralling, especially in a period of low growth. and finally there is the issue of equal treatment. how can we explain to countries which have made the necessary effort without any preferential treatment, and which are now starting to reap the benefits that the countries which are starting their reform later will be treated differently? in my opinion the best way to limit the negative effect of deleveraging on growth is to work on the quality of budgetary adjustment ( i. e. reducing unproductive spending without sacrificing tangible and intangible investment ) and to design reform in the shape of a programme as a whole that fosters investment and employment. incidentally this is what the french government is doing. there is however a limit to these plans : they are national and benefit indirectly from the reform policies of others, therefore very little. there is not really any european logic being implemented to support european reform projects and programmes. you are right. drawing up a european approach to reform is the immediate priority. much has been provided via the stability of the euro and will be provided as of this year by greater stability in the banking sector. but we need greater coordination in terms of economic policy ; i think that this is the main lesson to be