a sound banking system and well - functioning banking supervision are needed for that. here, it would be irresponsible to take the second step before the first one. iii. eventually, maybe already in the near future, the direct cost of executing securities transactions will no longer hinder further integration of the financial systems. given the progress made in technology and integration, one may at least come to this conclusion. we are therefore likely to see investment banking increase rapidly in importance. we can also expect further professionalisation of investment decisions, for instance, in the form of investment funds. in the bond markets of the euro area, government bonds and bank debt securities still greatly predominate. nevertheless, a strong increase in corporate bond issuance is already apparent. and equity markets are growing rapidly in continental europe. the advance of market - based financing structures is changing the role played by banks in the financing cycle. for one thing, the refinancing of banks is shifting from the traditional taking of time and savingsdeposits to the issuing of debt securities of their own. moreover, simple corporate lending is losing ground as a source of income to commissions stemming from issuance or derivatives business. of course, precisely where the structural change in the european banking sector is leading remains uncertain. but there are signs that banks as a whole are keeping their lending business focused on the domestic markets. this is one reason why a decentralised banking supervision system - still a national responsibility - is objectively warranted in the european monetary union. one also has to consider the persistent differences from country to country - despite the harmonisation of european banking legislation. local supervision may therefore be more efficient, given its better knowledge of the market and greater proximity to the banks. nevertheless one has to take due account of the banks ’ cross - border activities. for this reason, central banks and the supervisory authorities already cooperate closely today on a multilateral basis. new technologies and the intensification of competition point to comprehensive consolidation in the banking sector in the next few years. as a consequence, banking supervisors are naturally facing correspondingly great challenges. clearly, questions of systemic stability are moving to the top of the agenda for banking supervisors. iv. besides the globalisation of the financial markets, the launch of european monetary union constitutes a particular challenge of its own. monetary policy is now being applied to a major financial area. moreover, this area is undergoing a very rapid process of change, partly propelled by the euro itself. let me

will open up many new options. they naturally also imply uncertainties. these are, however, unavoidable if competitive trends are to remain dynamic. but they likewise imply a real prospect of greater economic prosperity. the fundamental prerequisite of such greater prosperity remains, of course, order and stability in the financial system. needless to say, there are major challenges ahead ; cut - and - paste approaches will not get us very far. at the same time, it is important to learn from the experience and perceptions of others. therefore, the two days that we are about to devote to these matters seem to me a very worthwhile investment.