costs. when these conditions are satisfied, finance can promote economic growth and serve best the society at large. indeed, a well developed financial system serves the primary functions of screening and monitoring investment projects, allowing the diversification of risks, facilitating the process of price discovery, and providing the service of liquidity transformation by matching short - term savers with long - term borrowers. overall, finance helps lifting financial constraints for firms, allowing the realisation of projects with positive net present value, which would have otherwise not been implemented. there are however some forms of financial innovation which may generate perverse incentives, reduce transparency, and overall weaken the stability of the financial system. let me take securitisation as an example. when correctly implemented, securitisation allows risk to be transferred from the originators of the loans to financial investors willing to hold that risk. this in turn generates a more efficient allocation of risks. the recent financial crisis has, however, highlighted severe weaknesses of such a scheme, related to misaligned incentives, lack of transparency and poor risk management. this form of intermediation has introduced several layers of management between the investor and the investment. managers had the incentive to place in the market as many instruments as possible, as their compensations were mainly coming from collection of fees. investors, on the other hand, were attracted by the relatively higher return in times of low investment rate levels and by the sense of security provided – among other things – by the assessment of rating agencies. the ultimate outcome was that instead of dispersing risks associated with bank lending, securitisation had the opposite effect of concentrating them in the banking system, with harmful consequences for financial stability. the size of the financial sector is another aspect which deserves close scrutiny. when the financial system grows too large it may eventually lead to a misallocation of resources. of course, it has to be acknowledged that developed credit markets are important for business start - ups. however, while finance is a crucial element for the schumpeterian process of creative destruction, the recent financial crisis has also highlighted the role that large financial markets play in downside risk. a growing number of academics and opinion makers are questioning the theory that the effect of financial markets on growth is always positive and increasing. the relationship may well be non - linear : when of reasonable size, financial markets do help allocating resources efficiently and promote economic growth. however, as they grow larger, it may well be that financial markets may ex

campaign ". this campaign focuses on four main themes : the visual appearance of the banknotes, their security features, their denominations and the common changeover modalities. it is designed to complement the other information campaigns on the euro, particularly those run by the national authorities in each euro area country. naturally, and as i mentioned earlier, we are also relying on the efforts of the banking community in this regard. at the end of the day, no television advertisement or billboard can replace the direct and immediate advice which competent bank employees can give to their customers. ladies and gentlemen, roughly a year from now, we shall finally be using the new euro banknotes and coins and our national currencies will no longer be in circulation. however, even then, the euro area will still not completely function as a truly unified currency zone. as i mentioned earlier, euro area financial markets are not yet fully integrated. i would also like to draw your attention to another area, which directly concerns the banking community, and where the potential benefits of the euro have yet to be fully exploited. i am referring to the price differential that continues to exist between cross - border retail payments within the euro area and those within individual member states. like the cash changeover, this is another area where the banking community has a crucial role to play in securing the full benefits of the common currency. i appreciate that this also represents a substantial task. however, once european businesses and citizens are using the euro for their everyday transactions, the provision of low - cost, efficient cross - border retail payment services will undoubtedly become a clear policy priority. finally, returning to the title of my speech " where are we 11 months before e - day? ", i would say that so far we are well on track. even before the introduction of euro banknotes and coins, the euro has already delivered much of what was expected. we regard these achievements with some satisfaction. nonetheless, this does not mean that we are complacent. the enormous challenge of the cash changeover still has to be met and, despite all past and ongoing work, a lot remains to be done. even after the changeover, the ecb does not anticipate settling down to " business as usual " anytime soon. our objective is to make the euro a lasting success. i am confident that - by also building on our good working relations with the banking community - we shall continue to succeed in this endeavour. thank you ladies and gentlemen.