##u, journal of common market studies, vol. 42, 815 - 840. expressed in logarithms and first differences, gdp growth can be decomposed into 4 ( growth of private consumptio n ) δ ln gdp = δ ln c + δ ln gdp − δ ln c ( consumpti on smoothing ) or, in more detail, δ ln gdp = δ ln c + δ ln gdp − δ ln gnp + δ ln gnp − δ ln a ( growth of private consumption ) ( smoothing by net foreign income ) ( smoothing by external saving ) ( smoothing by domestic saving ) + δ ln a − δ ln c in this disaggregation, we would expect the term δ ln gnp − δ ln a to be the main channel through which consumption smoothing by cross - border banking integration should work. in the following table, calculated for germany, the coefficients βe and βh indicate the absorption of additional gdp growth by net foreign income and external saving, respectively. 5 a positive sign stands for a positive effect on consumption smoothing. the coefficients suggest that international consumption risk sharing in germany is primarily achieved by countercyclical net foreign income, whereas external saving tends to go along with business cycles. this outcome holds for both overall consumption smoothing and consumption smoothing vis - a - vis other euro - area countries only. international consumption smoothing in germany : absorption of additional gdp growth by net foreign income ( ße ) and external saving ( ßh ) overall vis - a - vis emu βeewu βhewu - 0. 03 0. 13 - 0. 23 - 0. 17 0. 08 - 0. 16 βe βh 0. 01 0. 22 z international consumption risk sharing in germany is mainly achieved by countercyclical net foreign income z external saving tends to be procyclical 13 november 2008 comments on papers by p. lane and s. kalemli - ozcan et al. 9 of 10 where gdp = gross domestic product, gnp = gross national product, a = domestic absorption, c = private consumption. the sum of βe and βh corresponds to 1 - κ in the paper. however, the coefficients are calculated by simple ols and do not account for endogeneity and other factors like - for example - serial correlation. therefore, significance levels are not indicated and the values should be interpreted with caution.

axel a weber : discussion of “ emu and financial integration ” by philip lane and on “ financial integration and risk sharing : the role of the monetary union ” by sebnem kalemli - ozcan et al. comments by professor axel a weber, president of the deutsche bundesbank, at the fifth ecb central banking conference “ the euro at ten : lessons and challenges ”, frankfurt am main, 13 november 2008. * * * introduction the euro at ten can justifiably be called a success story, and increasing financial integration in the euro area is a striking example of this. i am therefore pleased to comment on the two very interesting and insightful papers presented by philip lane and by sebnem kalemliozcan, simone manganelli, elias papaioannou and jose luis peydro. professor pagano has already given some helpful and meaningful comments on the papers. in my comments, i shall first concentrate on philip ’ s reflections on emu and financial integration and add to them some findings for germany. second, i shall discuss some issues raised by sebnem kalemli - ozcan et al. in their paper on the role of the monetary union for financial integration and risk sharing. philip r. lane : “ emu and financial integration ” philip lane : emu and financial integration z provides broadly based evidence that the first 10 years of emu have seen a remarkable increase in financial integration z many barriers to full integration still remain, but initiatives are under way to remove obstacles in the financial infrastructure z the eurosystem is supporting these projects ( sepa, target 2, t2s ) z challenges a number of general predictions about the macroeconomic impact of financial integration on the financial development of euro - area countries, international risk sharing and net capital movements 13 november 2008 comments on papers by p. lane and s. kalemli - ozcan et al. 3 of 10 philip lane ’ s paper builds on his extensive research on emu and financial integration, and presents us with a comprehensive and well structured overview of recent research and market developments. the paper provides broadly based evidence that the first ten years of emu have seen a remarkable increase in financial integration, even if the extent of convergence varies across different sectors. philip notes that there are still many barriers to full integration, but that initiatives, such as sepa, target 2 and t2s should remove some of these obstacles. this is why the eurosystem is actively supporting