what does the ecb say to the fact that, in the context of the second package for greece, governments have nonetheless been talking about solutions such as a debt rollover or a partial debt buyback, which could lead to default? trichet : the responsibility for this lies with the governments. the governments have been warned, in no uncertain terms and using all possible means. i have said so publicly. i have explained in detail to the heads of state and government and to the finance ministers, on several occasions, that, if a country defaults, we will no longer be able to accept its defaulted government bonds as normal eligible collateral. the governments would then have to step in themselves to put things right. that would then be their duty. ftd : what does that mean in concrete terms? trichet : in the event of a decision by the governments leading to a selective default or a default, which, again, we are warning against loud and clear, the governments would have to take care that the eurosystem is presented collateral that it could accept. ftd : when it comes to deciding whether a default has occurred, will the ecb rely, as it has until now, on the rating agencies, or might the decision not be dependent on what they say? trichet : again, it is not the working assumption of the governing council. ftd : let ’ s talk about the crisis management of the euro area governments. the heads of state and government and the finance ministers give the appearance of being a chaotic bunch. they often create such a cacophony that it inflames the crisis rather than dampening it. what needs to change? trichet : there is an absolute need to improve “ verbal discipline ”. the governments need to speak with one voice on such complex and sensitive issues as the crisis. it is, of course, complex to take into account the need for sound, shared management of the economic pillar of the economic and monetary union, whilst fully respecting the functioning of the 17 democracies of the euro area. but speaking with one voice in a period of crisis is of essence. and, after all, it is what was possible after lehman brothers at the end of 2008. ftd : some euro area governments have said that chancellor merkel has frequently acted too slowly and has thus made the crisis even worse. is that true? trichet : not in the least. i would see a discussion of this kind as being completely misplaced in

are “ second generation ” services, which represent a quantum leap forward in the integration and quality of the euro area core infrastructure, with substantial benefits for financial market integration. iv. eurosystem activities to promote financial integration i now turn to the report ’ s third chapter, titled “ eurosystem activities for financial integration ”. it provides an overview of the main eurosystem activities in 2007. the ecb and the eurosystem contributed to financial integration and development in a number of ways, building on their expertise and special nature as public institutions which are both active in the market and have close interaction with market participants. we distinguish between four types of activities [ see slide 24 ]. first, we give advice on the legislative and regulatory framework for the financial system and make rules. a good example is the eurosystem ’ s contribution to the first full review of the lamfalussy framework last year. the eurosystem reiterated its support to the lamfalussy framework subject to some necessary functional enhancements within the current institutional framework and in particular emphasised the need for intensification of cooperation and information - sharing between supervisors and central banks. second, we seek to act as catalysts for private sector activities. in this regard, we have been instrumental in the success of the short - term european paper, or step, initiative. this initiative aims to promote the integration of short - term paper market through the voluntary compliance of market players with a core set of standards. the outstanding amount of eurodenominated step - labelled securities already accounts for about 30 % of all eurodenominated short - term paper placed by non - government issuers worldwide. third, we enhance knowledge, raise awareness and monitor the state of european financial integration. this report, and the indicators of financial integration that are presented here, are an illustrative example of this type of activity. fourth, we provide central bank services that also foster european financial integration. as an example, i choose our wholesale payment system, target2. the successful launch of this single technical platform in november last year marks a significant milestone in financial integration. target2, replacing target, provides for a harmonised service level, a single price structure, and a harmonised set of cash settlement services in central bank money for all “ ancillary ” systems, such as retail payment systems, clearing houses and securities settlement systems. all central banks and target users will have migrated to target2 by 19 may this year. v. concluding remarks