foster initiative and encourage investment. social dialogue can, and should play a crucial role in promoting acceptance of the policies necessary to bring about this change. the attainment of greater efficiency in the public sector is a key objective because it provides vital support services to the productive sectors of the economy. it must, therefore, become better geared to ensure that the intentions of policy - makers are implemented rapidly and effectively. determined efforts must be made to streamline bureaucratic procedures, eliminate outdated regulations and generally reduce the cost of engaging in any economic activity. the better regulation unit in the office of the prime minister must meet the expectations its creation has raised. failure to do so risks compromising all the efforts being undertaken at both the macro and microeconomic levels to create a modern, dynamic economy. at the national level, moreover, we need to understand that the simultaneous pursuit of economic growth and a high degree of social protection can only be achieved by making our product and labour markets more flexible ; by investing more in people, refining their skills and helping them into work, while introducing an obligation to take up jobs ; and by giving more importance to developing our scientific and technological base. we do not need to look far to see how this can be done. faced with high labour costs in the late 1990s, german companies started restructuring and downsizing. the government meanwhile introduced social security reforms aimed at making the welfare state less expensive, as well as labour market reforms that created incentives for the jobless to work. an awareness developed that the solution to chronic deficits and unemployment could no longer be to cut public investments. as a result, germany ’ s unit labour costs have fallen by 12 per cent since 1999 against those of france. the payoff was significant : the volume of german exports rose by 47 per cent over the same period, compared with 25 per cent in france. the french were not unaware that they, too, had a competitiveness problem. a commission of independent experts led by the former managing director of the imf, michel camdessus, was set up in 2003. reporting earlier this year, the experts concluded that without a change of direction, decline was a real threat for france. they identified two obstacles to growth : first, not enough people worked, and those who did failed to work long enough ; second, the heavy state had become a costly drag on the economy. our own country faces a similar predicament. malta ’ s labour participation rate is among the lowest in the eu at 58 per cent

single market in financial services should contribute to the emergence of a healthier financial system in the accession countries. now it could of course also be argued that the extension of the “ single passport ” to most aspects of the provision of financial services foreseen by the financial services action plan could well expose the accession countries to new risks, particularly those emanating from within the eu itself, with which caviglia, g., krause, g & c., thimann. 2002. key features of the financial sectors in eu accession countries, in financial sectors in eu accession countries. ed., c. thimann c. frankfurt : european central bank. claessens, s., demirguc - kunt, a & h. huizinga. 1998 ( rev 2000 ). how does foreign entry affect the domestic banking market? world bank working paper no. 1918. washington : world bank. these countries are already closely integrated. indeed, the ecb has itself recently stated that the integration of financial markets in the region could increase the chances of systemic disturbances affecting more than one member state. in this regard, dr buch ’ s paper on the implications for financial stability of foreign bank entry should help to place the discussion in an empirical context. another important aspect of financial market integration relates to regulation and supervision. as the process intensifies, the distinction between different types of financial institutions and markets will become increasingly blurred. in such a scenario, it will be even more important for all institutions with financial stability responsibilities - be it the central bank, supervisory authority or other government agency - to co - ordinate their efforts in the area of system oversight and to share any information which could be relevant to the proper fulfilment of their respective functions. indeed, whereas until recently the prevailing concern related to the choice of institutional arrangement for the supervision of the financial sector, it is now sometimes argued that it is not the institutional framework which matters most, but rather the existence of adequate mechanisms guaranteeing the exchange of information and policy co - ordination between the entities responsible for overseeing systemic stability and those that monitor the health of individual financial institutions. beyond that, it is claimed, any institutional set - up can work. likewise, any one can fail. while this conclusion might be valid from a national point of view, it does little to address the question of whether information exchange and policy co - ordination relating to financial sector developments affecting the eu as a whole would be