how to reach sepa? in essence, financial integration is achieved when three conditions are fulfilled : ( 1 ) singleness of the market, ( 2 ) market participants ’ equal access to the market, and ( 3 ) market participants ’ equal treatment in the market. for the retail payments markets, this means that market participants must be subject to a single set of rules when dealing with payment instruments or services, have equal access to the payment services or products, and be treated equally. i see three main barriers which have to be removed if the euro area is to become a more integrated retail payments market. these are the technical, commercial and legal barriers which exist between the current national payment markets. the first barrier is a technical barrier. of particular importance for sepa is the development of common technical standards, which enable the smooth connection of systems and the transfer of messages between different players. technical standards are the basis for payment systems, and could also be referred to as the “ plumbing ” of the financial system, ensuring the transfer of funds. national fragmentation through standards should belong to the past and common standards for the euro area should be in place. the ecb fully supports the work of the epc in this field, which has cooperated with the international standards organisation ( iso ) to develop these standards. the second barrier is a commercial barrier. for sepa, the development of a common set of rules and business practices is a necessity. this is referred to as the “ rulebooks ” that ensure a common treatment for transferring funds. the epc has agreed on the common rulebooks for credit transfers and direct debits, and a framework for card payments. this single set of rules will allow different entities to provide core services throughout the euro area. the ecb fully supports the epc ’ s work in this field. we also subscribe to the concept of separating the rules from the processing services, as it will allow operations on a european scale and bring an end to vertical integration, in which scheme rules are set by the processors. the third barrier is the legal barrier. the current regulatory differences across the euro area hinder the provision of efficient and automated services throughout the euro area. the proposed payment services directive will remove these legal barriers. the directive – and there we are privileged to have later on the explanations of mr mccreevy - will create a clear and homogenous framework for making payments in euro. the eurosystem strongly supports the work on the directive, as it will establish

the legal certainty which is necessary for operations across the euro area. an early adoption of the directive is key, as it will facilitate the implementation of sepa. given the importance of financial integration, and sepa in particular, the ecb is acting as a helping hand or “ catalyst ” for private sector initiatives and is monitoring the progress of sepa. as a catalyst, the ecb devotes particular efforts to fostering collective action in the private sector to address coordination problems, which hamper financial integration. the ecb also provides guidance and has made its expectations clear so that the sepa project does not become a short - term solution for crossborder payments, but becomes an ongoing project that will bring the euro area closer to having an advanced retail payments market. let me now turn to the success factors for sepa. success factors for sepa as part of any good project, it is important to have a clear vision and achievable deadlines. the eurosystem, in cooperation with the european commission, has defined a common vision for sepa, which should inspire the sepa project. we see sepa as “ an integrated market for payment services which is subject to effective competition and where there is no distinction between cross - border and national payments within the euro area ”. for euro area citizens, this implies that they will be able to make cashless payments throughout the euro area from a single payment account anywhere in the euro area, using a single set of payment instruments, as easily, efficiently and safely as they do today in the national context. this vision provides the basis for sepa and guides the different initiatives of the banking industry. indeed, the vision has become the “ leitmotiv ” for changes in the retail payments market. to realise the sepa vision, strong commitment from all the stakeholders is required. the ecb and the commission are eager advocates of the sepa project as it brings an integrated and competitive market. furthermore, the european banking industry has shown commitment by launching several initiatives to create sepa, and by setting up the epc to drive the different industry initiatives. more recently, public administrations have also shown their commitment to sepa, as the ecofin council in october expressed its strong political support for the creation of sepa. the success of sepa depends on the commitment of all stakeholders, and this will be facilitated when the advantages of sepa are made as visible as possible. let me therefore share with you some thoughts on the benefits