eva srejber : sweden and european integration speech by ms eva srejber, deputy governor of sveriges riksbank, at the ibc euroforum : nordic banking, stockholm, 3 june 2002. * * * let me begin at once by stating the limits i intend to set for this subject in my speech : i intend to focus on financial integration within the eu and to discuss how companies and individuals can benefit from the advantages created by integration in this field. my starting point is, thus, that greater integration in the financial area mainly brings advantages, but there is cause to seek to analyse the forces behind such a development. as different public rules and regulations play an important role for developments in the financial sector, there is also reason to discuss a number of questions of a policy nature that are already on the agenda for a strengthened co - operation within the eu. this is largely a matter of achieving a balance between providing scope for product development and efficiency in the production of financial services in europe, and creating the right conditions for stability and predictability in the financial system. from white paper to financial action plan ten years ago, 1992, was the final date for realising the common market in the eu on the basis of the programme in the white paper presented by the european commission in 1985. in this paper the commission described a total of almost 300 different directives that should be adopted in order to realise full mobility for goods, services, capital and persons within the european community. twentyfour of these directives concerned financial activities, including the liberalisation of capital movements. almost all of these directives also came to be decided within the set time period, and a number of favourable conditions were created for bringing about more vigorous competition between the different eu member states. a lot has also happened in this field and contributed to strengthening developments within the eu with regard to both supply and demand for financial services. the most important driving force behind this development relates to the general internationalisation process, the new communication technology and the deregulation of parts of the government rules and regulations. when the euro was later introduced as the single currency in twelve eu member states, it provided the ‘ finishing touch ’ that abolished uncertainty over exchange rate developments in a large part of europe. at the same time, there is some disappointment that it has not been possible to create a market completely without borders for all types of financial activities within the eu even more quickly, and that some obstacles still remain. these obstacles are partly linked

to gain from completely harmonised services. the principles that form the basis of the eu ’ s regulatory framework for the financial sector are to a great extent based on this general orientation. the directives generally establish criteria of minimum harmonisation in order to enable financial operators to be active throughout the entire union. on this basis, authorisation and supervision should in principle be performed by the authorities within one member state, normally the home country of the institution in question. this “ licence ” to conduct financial operations should thus be recognised by the authorities in the other member states and financial institutions should be able to operate there from their establishments in their respective home country. in the same way, the ec directives on securities markets have led to some minimum harmonisation of the conditions for trade in financial instruments, e. g. what the issue prospectuses should contain and how insider trading could be limited. limitations in practice the problem is that it is difficult to apply this model for rules and regulations fully when there are many different national peculiarities which are hard to do away with. this has therefore provided some scope for the authorities also in the host countries to apply supplementary provisions, which have in practice impeded cross - border competition. such provisions are often attributed to some form of general good, which can be hard to define - and for which it is even harder to disclose a hidden protectionist background. another problem with the legislative work within the eu is that it has been so difficult to continuously modernise the rules and regulations and adapt them to new market conditions. the legislators have in several cases been one step behind the market, which has meant on the one hand that new products and operations may not have been encompassed by the new freedom of movement on the single market, and on the other hand that the protection the legislation aims to provide has been undermined. this problem came under particular focus last year, with regard to the securities markets within the eu, and a committee of wise men headed by former emi head alexandre lamfalussy proposed a simplified procedure for the entire legislation process. as you know, directives are adopted by the council of ministers and the european parliament in a co - decision procedure, which is in itself a complex process and even more so when the directives include detailed provisions on what is to be regulated. a more efficient method would be to limit the directives to fundamental principles and to delegate the detailed design and further development to a special committee. furthermore, by involving the national supervisory authorities closer in the legislation