the efficiency of legal systems in resolving conflicts in financial transactions and in some structural features of the less developed european banking sectors are all factors that are likely to help the financial system reallocate capital faster from declining sectors to those with good growth potentials. 6 in addition, recent ecb research has pointed to the fact that large differences persist among european countries in terms of new business creation and patenting activity. it has concluded that much of this difference can be attributed to the existence of more developed credit markets and risk capital markets. 7 all this evidence has led most financial economists to think of the relationship between finance and growth as one in which “ more is better ”. however, the recent crisis has revealed that a financial sector which goes beyond a certain threshold ( or breaking point ) can harm the economy and society as a whole. in particular, we have seen that an oversized financial industry tends to exacerbate information asymmetries, moral hazard problems, and the hunt for yield, leading to excessive risk - taking and over - leveraging of the system. the events of 2007 – 2008 suggest that when financial sectors are “ too large ”, the allocation of resources may become inefficient. examples of such misallocation were abundant during the dot - com rajan, r., and l. zingales, 1998. financial dependence and growth. american economic review 88, 559 – 586. wurgler, j., 2000. financial markets and the allocation of capital. journal of financial economics 58, 187 – 214. philippon, t., and n. veron, 2008. financing europe ’ s fast movers. bruegel policy brief 2008 / 01. hartmann, p., heider, f., lo duca, m, and e. papaioannou, 2007. the role of financial markets and innovation in productivity and growth in europe. ecb occasional paper 72. popov, a., and p. roosenboom, 2009. on the real effects of private equity investment : evidence from new business creation. ecb working paper 1063. expansion, when many high - tech projects of little value were generously financed. numerous examples of misallocation were associated with the credit growth of the early 2000s as well, of which the expansion of the us sub - prime mortgage market is just the most obvious one. we can think of examples in europe too – for instance, growth in spain relied

given more flexible structures in the markets, a lastingly stable euro will be able to fully exploit the undoubtedly large potential for economic benefits, and then it will also be able to foster political integration. – 6 – to sum up : the euro is not the final aim of european integration. even in 28 days ’ time it will remain a future - oriented project. for it is not just a question of introducing the euro. the euro also requires ongoing monetary stability. and the euro requires a sufficient degree of political consensus on the basis of economic dynamism and flexibility. only in this way can potentially dangerous political conflicts be avoided in the long run. we are investing great hopes and expectations in this future - oriented project associated with the euro. all those involved are responsible for doing what is necessary to ensure that these hopes and expectations are fulfilled.