markets. third, at the end of 2005, we contributed to the european commission ’ s green paper on mortgage credit in the eu. this is an important segment of the banking and retail markets, with an outstanding volume of more than €4 trillion in residential mortgage debt in the eu, corresponding to around 40 % of eu gdp. fourth, the project for a single european payment area under which all banking transactions conducted across the euro area will incur the same charges as a domestic transaction. this will be a powerful engine for the further integration of financial markets. finally, we have launched recently a new initiative – target2 securities, which will offer the settlement of securities transactions in the euro area. there we are still in the process of consultation with the private sector. hence, as i am sure you agree, the economic and financial environment of the euro area is clearly changing for the better. we are certainly not witnessing the creation of a “ fortress europe ” – rather, i would prefer to emphasise how european integration complements global integration. at the same time, euro area countries have become more interlinked than they were at the start of economic and monetary union ( emu ). simply put, we all have a larger stake in each other. my third lesson is that monetary and financial integration are playing an important role in the smooth functioning of our vast continental economy with a single currency. there are numerous well - known economic benefits arising from financial integration in the euro area. by making markets deeper and more liquid, financial integration creates economies of scale and increases the supply of funds for investment opportunities. the integration process fosters competition, the expansion of markets and intermediation, thereby complementing and leading to further financial development. financial development, in turn, leads to lower intermediation costs and a more efficient allocation of capital. allocating resources to the most productive investment opportunities ultimately increases the potential for greater and more sustainable non - inflationary economic growth. also economic agents can invest more easily in any part of the euro area and thereby spread the risk of potential local shocks having an impact on income and consumption. 7 in 1973 robert mundell made a second seminal contribution to the debate on currency areas. he explicitly discussed the role of financial integration, in the form of cross - country asset holding, in international risk sharing. countries sharing a single currency can mitigate the effects of asymmetric shocks in particular by diversifying their income sources and by adjusting their wealth portfolio. at the time, this

to invoke life expectancies. life expectancies at age 65 speak to the question of how many years into retirement individuals are likely to collect benefits. life expectancies at age 20 address the question from a different perspective - as individuals enter adulthood, we might have them spend a constant percent of their time in work and retirement. the age - 65 standard shows that, for males born between 1875 and 1995, life expectancy at age 65 has increased 7. 4 years, an average of 0. 6 years every decade ( table 2 ). it also turns out that life expectancy has increased more rapidly for those born in the twentieth century - over this shorter period improvement has been about 0. 7 years every decade. the age - 20 proportionate standard works out as follows. in 1940, at the dawn of social security, 20 - year - old males could expect to work another 45 years and to live just 1. 9 more after retirement. that is, they could expect to spend 96 percent of their remaining life in the work force and 4 percent in retirement. today, 20 - year - old males can expect to live another 55. 6 years. if they were to spend 96 percent of that time in the work force, the nra would be slightly more than 73. by this standard, the nra would have advanced 1. 4 years every decade. health status is also relevant. one measure is the share of men near death, defined as being in the last two years of life. in 1960 this share, for men around today's social security early retirement age of 62, was about 6 percent ( figure 2 ). in 2000, the share of 68 - year - old men near death was at this baseline level of 6 percent. by this health standard, in 40 years healthy life expectancies have increased 6 years, or 1. 5 years per decade. table 2 male life expectancies year of birth year turning mean life expectancy at 65 year of birth year turning mean life expectancy at 20 12. 7 46. 9 13. 8 49. 5 16. 5 55. 6 18. 4 n. a. 20. 1 n. a. mean life expectancy at 65 is from the social security administration and assumes individuals experience average mortality rates over the span of their remaining life. the assumption underlying life expectancy at 20 is more crude : individuals experience mortality rates for that year over their remaining life. source : social security administration and national