the place where securities are issued do not affect investors ’ clearing and settlement costs. it also means that the conditions at which banks obtain central bank money is not affected by the location of the securities they use as collateral. purely domestic retail payments as well as clearing and settlement activities in the eu are relatively cost effective and safe, but there is still progress to be made as regards cross - border arrangements. we at the ecb have a particular interest in the clearing and settlement infrastructure because of its role in the implementation of monetary policy. moreover, a major malfunctioning in this area might have important implications for the financial system at large and threaten financial stability. the ecb is active in this field in various ways. first, through the development of target 2. integration in payment systems and the euro money markets was achieved very quickly after the introduction of the euro because of the existence of target, the large - value payment system operated by the eurosystem. this will soon be replaced by target 2, which will reinforce the benefits from a common infrastructure. it will also provide for a harmonised level of services and a single price structure. target 2 is a clear illustration of how public authorities can contribute to financial integration by providing a common technical infrastructure. the second way the ecb is active in this area is through the removal of the remaining obstacles to integration. the report prepared by the group headed by alberto giovannini identified three types of barriers to efficient and competitive markets : differences in technical requirements and market practice ; tax differences ; and issues relating to legal certainty. for its part, the ecb contributes to removing these obstacles mainly by acting as a catalyst for improvement and by encouraging discussion among the relevant players. we also try to harmonise our central bank procedures and operations, which is beneficial to integration. finally, we also contribute to an integrated regulatory and oversight framework for clearing and settlement. we set risk management standards for the securities settlement systems that are used for our credit operations. we also regularly assess the systems that hold collateral for our operations. in a broader perspective, given the potential effects of the failure of a major clearing and settlement system, we think that public standards for risk management are essential. the escb, in co - operation with the committee of european securities regulators, is currently developing such standards for eu clearing and settlement systems. assessment of the progress that has been made in cross - border banking i remain very much convinced that the framework to foster financial integration in europe is now largely in place. my

for integration. the timely finalisation of the fsap is a very impressive achievement. its full benefits will now be reaped if the rules are implemented and enforced consistently among member states. in this process i see a crucial role for the lamfalussy approach to financial regulation and supervision. this new framework provides for the establishment of sectoral committees of national authorities to pursue a consistent implementation of european rules. the new arrangement will be very valuable for the fsap, but also for the eu regulatory provisions in general. the lamfalussy approach addresses the supervisory challenges arising in more integrated financial markets. banking groups that perform a lot of their business in other member states rightfully expect to face similar attitudes and procedures of national supervisors. this is crucial for alleviating their compliance costs and also to ensure that no major competitive distortions are introduced through widely diverging supervisory practices. it is also a precondition for further cross - border activity. regulatory convergence, which applies to high - level principles, has therefore to be complemented by supervisory convergence. in other words, in the day - to - day practice the high - level principles have to be consistently implemented by supervisors. national authorities must therefore step up their information exchange and identify best work practices. moreover, closer co - ordination of supervisory actions is needed, especially for the major eu financial groups. the lamfalussy approach will not only foster financial integration, but also help to preserve financial stability. in integrated financial markets, risks can more easily spread from one institution to another and from one country to another. the so - called ‘ systemic risk ’ is therefore no longer confined to one member state but has to be looked at from an eu - wide perspective. the role of the committee of european banking supervisors to enhance the cross - border exchange on individual institutions is therefore certainly important. at the same time, the cebs ’ s work is complemented by that of the escb ’ s banking supervision committee. the bsc closely monitors developments in the european financial system from a macro - prudential perspective. it has also been working successfully on arrangements of co - operation in the area of financial crisis management, another important dimension of financial stability. financial infrastructure i now come to the third important element of a robust framework for financial integration and that is often unknown to the general public, namely clearing and settlement. this particular infrastructure lies at the core of all financial markets and is indispensable for their proper functioning. integration here means that