the following question : would the eu member states currently be willing to give up more national sovereignty above and beyond monetary policy, say, by transferring prudential supervisory powers to a supra - national institution? a central supervisory authority would have to be equipped with sovereign regulatory and intervention powers. would governments and the public be prepared to accept a bank in their country being shut down by a supra - national supervisory authority, thus placing claims on taxpayers at the national level, by means of a potentially necessary bailout? in an insolvency crisis, a european authority would be deciding how national tax revenue is used. another question that affects practical supervisory activity is this : does centralising supervision provide more systemic stability? as mentioned earlier, the focus of most banks ’ business is still on their home markets. and there, they are subject to their respective national supervisors, which can rely on especially profound knowledge of their country ’ s legal framework and banking system. crossborder issues are even today already being addressed in the various multilateral coordination bodies. the europe - wide diversification of business activity must naturally remain under continued observation so that, if necessary, the supervisory system can be adapted accordingly. the way i see it, the aim is not a centralised authority but rather an improved coordination of supervisory rules and practices. i am confident that the present supervisory system in europe is capable of pressing forward with the necessary harmonisation of different supervisory methods and regulatory framework conditions in a dynamic manner. to be sure, there are still harmonisation gaps which remain to be closed. however, a centralised supervisory authority would be confronted with the same problem of having to take account of special national features in its regulatory framework owing to the still - heterogeneous banking systems in europe. therefore, the optimum minimum level of harmonisation needs to be defined. for the time being, at least, it seems questionable, in my view, whether a complete streamlining of all rules is necessary, particularly owing to the implications for competition and in light of the variety of banking systems. v. ladies and gentlemen, what conclusions may we draw? as the analysis has shown, there are no simple one - size - fits - all solutions for an adequate supervisory model for europe. i feel that the present supervisory structure is functionally viable. naturally, it must constantly rise to new challenges and come up with suitable answers. a gradual refinement of the tried and tested system seems more suitable than a “ big bang ” in

react with the necessary speed to new developments in the financial markets. however, this is not a supervisory problem as such but rather the consequence of the existing european legislative process, which should be accelerated wherever possible. iv. ladies and gentlemen, i do think it has become clear that the question of an adequate supervisory structure for europe is an extremely complex subject. against this background, some banks and observers have called for a central supervisory authority in europe as a sort of panacea. however, controversy reigns as to whether, and if so, to what extent supervision should be carried out by the european central bank or a separate european supervisory institution. i tend to take a dim view of these proposals ; in my opinion, they do not represent a real solution to the problem and would be less than optimal in view of the financial market structures. the establishment of a central supervisory authority does not automatically lead to a harmonisation of supervisory rules. conversely, the rules can also be harmonised without a central institution being founded. i feel that a lot of thought should still be given to further developing the european supervisory system ; for the key measure of a supervisory model is its ability to effectively support the objective of system stability and to function efficiently. moreover, it must also be politically viable. we have already noted that there is still a rather wide range of different banking systems and financial market structures in existence in the eu. thus, the underlying question is : should a supervisory system determine the market or should prudential supervision follow market structures instead? i tend to lean towards the latter. of course, it is necessary to define a regulatory policy framework for the financial sector, too, since precisely this sector is of particular importance to the macroeconomy. however, a very large dose of sensitivity for the situation is needed in order to keep regulatory guidelines, either material or institutional in nature, from causing structural changes in the banking sector which do not yield any additional economic benefit. and here is another question : is the integration of financial markets in europe already at such an advanced stage that this warrants institutional reforms of banking supervision in response? i think not. whereas in the meantime the european interbank money market has already reached a high level of integration, some segments of the market for banking and financial services still lack the necessary depth, efficiency and completeness. for instance, retail banking has largely remained a national matter due to continuing differences in tax structures, legal regulation and cultural backgrounds among eu countries. adding to that, there is