the integration and coordination of financial supervision. of these three areas, i will next briefly focus on securities trade. a problem in the securities markets is their current lack of depth and integration. an important challenge is the fragmentation of clearing and settlement systems. it is an important factor behind the high price of securities transactions in europe. this applies particularly to trade in equities. the cost of an equity transaction across national borders but within the eu can be as much as four times the cost of a similar transaction in the u. s. it is exactly these costs that prevent the integration of equity markets. they hurt the issuer of a stock via reducing its price. the provider of financial services, in turn, faces higher costs. the infrastructure of the markets has too strong an effect on the location of transactions and businesses. in this situation, current national features of the clearing and settlement systems should be evaluated from the point of view of their future in the integrating european market.

erkki liikanen : how to boost europe's growth potential? speech by mr erkki liikanen, governor of the bank of finland, at the ceps breakfast meeting, brussels, 10 march 2006. slides for this speech can be found on the bank of finland ’ s website. * * * economic growth in the eu has been sluggish in recent years, despite the robust world economy. as a matter of fact, growth has been strong in almost all parts of the world except for western europe. the weak performance of the euro area economy in recent years is not due to monetary policy. on the contrary, interest rates have been very low – both the long and the short term rates. neither can the exchange rate be blamed for the sluggish growth. the external value of the euro has not been at a level that would have hurt the overall price competitiveness of euro area industries. therefore, we have to look elsewhere for the reasons for the unsatisfactory growth performance. weak demographic trends have been one of the factors restraining the growth of the eu economy compared with many other parts of the world. in the future, the negative demographic trends will continue. in addition, rising oil prices have in recent years held back growth in the eu. unfortunately, economic policies cannot do much to reduce the effects of demographics and oil prices on growth. luckily, however, there are also issues that economic policies can deal with in order to increase europe's growth potential. let us now turn to those. it appears that the european economy has not been able to take advantage of new technologies and globalisation as effectively as the united states. the growth of labour productivity in the u. s. has exceeded that of the eu since the mid 1990s. this table shows that the difference in productivity increases between the eu and the u. s. is largely due to developments in the it goods producing sector, and – even more importantly – in the service sector. within services, it is retail trade, wholesale trade, and financial services that count for most of the diverging productivity developments. these sectors are important users of it. indeed, there seems to be a lot of unexploited potential in the eu when it comes to labour productivity. first of all, productivity can improve within each industry and within each firm. secondly, aggregate labour productivity can also be raised by the exit of industries and firms with weak productivity, and the entry of those with better productivity. public authorities can facilitate