feasibility of this project, and to take a final decision in february next year. afterwards, we intend to launch a broad public consultation of all interested parties. another sign of incomplete integration is that bank interest rates still vary considerably across countries. i should stress, though, that such differences are also partly the consequence of various other factors, such as product characteristics and business practices. some press commentators concluded from the ecb ’ s report that these high cross - country differences reflected insufficient see morgan, p., rime, and e. strahan ( 2004 ). “ bank integration and state business cycles ”, quarterly journal of economics, 119 ( 4 ), pp. 1555 - 85. commission of the european communities ( 1990 ) “ one market, one money ” european economy 44. european central bank, “ indicators of financial integration in the euro area ”, september 2006. european central bank, “ differences in mfi interest rates across euro area countries ”, september 2006. competition. this is only part of the explanation. market fragmentation also affects the financial system ’ s efficiency. again, a comparison between europe and the united states is quite revealing. whereas the cost - to - income ratio of banks in the euro area is 64 % on average, it is only 58 % on the other side of the atlantic. this superior us performance can be explained, at least partly, by a more integrated market and a more harmonised regulatory environment. many of you experience first hand the obstacles that continue to hamper financial integration and cross - border banking in europe. some of these obstacles are related to legal and fiscal differences, while others may relate to the regulatory and supervisory framework. the latter are of particular interest to us considering that a task of the ecb, which is enshrined in the treaty, is to contribute to the smooth conduct of policies by national authorities in the field of supervision and financial stability. financial regulation and prudential supervision have a significant role to play in the financial system : to address market failures and safeguard financial stability. however, it is also true that in an evolving and integrating financial system, banking regulation and supervision need to evolve in order to keep up with developments. this, of course, begs the question whether the european regulatory and supervisory framework has kept pace with the development and integration of european financial markets. there are two aspects to this question : first, whether the current framework may be an obstacle to further financial integration. bankers often see the decentralised institutional set

an efficient and effective supervisory framework for a more integrated, competitive and developed financial system is crucial for europe ’ s growth. iv. concluding remarks ladies and gentlemen, a “ holistic ” approach to this gala dinner should also mean combining the food for thought, which i hope to have provided, with our attention to the more tangible nutritional elements, that is, our dinner. let me conclude by returning to adam smith and some pertinent views of his, as assessed by alan greenspan : “ modern economic analysis has confirmed much of what adam smith inferred from a far less impressive set of data. today ’ s economists generally point to three important characteristics influencing growth : ( 1 ) the extent [ … ] of a country ’ s integration with the rest of the world, ( 2 ) the quality of a country ’ s institutional infrastructure, and ( 3 ) the success of its policy - makers in implementing measures necessary for stability ”. as i have highlighted tonight, each of these three elements – integration, institutional infrastructure and stability ( both for macroeconomic and financial ) – remain of crucial importance to europe ’ s economic growth and prosperity. thank you very much for your attention.