jean - claude trichet : testimony before the committee on economic and monetary affairs of the european parliament introductory statement by mr jean - claude trichet, president of the european central bank, at the european parliament, brussels, 14 september 2005. * * * madame la presidente, mesdames et messieurs les membres de la commission economique et monetaire, j ’ ai l ’ honneur de paraitre devant votre commission aujourd ’ hui dans le cadre de notre dialogue regulier. a cette occasion, je voudrais rendre hommage a wim duisenberg, qui est decede a la fin du mois de juillet. le premier president de la banque centrale europeenne a apporte une contribution considerable a la construction europeenne. il a joue un role decisif dans la mise en place des institutions monetaires en europe, dans le lancement reussi de la nouvelle monnaie, dans l ’ affirmation de la credibilite de notre monnaie unique – l ’ euro – et dans l ’ instauration de la confiance placee en elle. nous le regrettons profondement. je commencerai mon intervention aujourd ’ hui par une evaluation de la situation economique et monetaire actuelle. ich mochte außerdem zu aktuellen themen der fiskalpolitik und zu den fortschritten im bereich der strukturreformen stellung nehmen. abschließend mochte ich die position der ezb zu den folgeaktivitaten hinsichtlich des eu - aktionsplans fur finanzdienstleistungen erlautern. economic and monetary issues at the time of my last appearance before the european parliament in july the underlying trend in real economic growth in the euro area remained modest. looking ahead, we expected that positive fundamental factors – notably strong global demand and robust earnings in the euro area – would contribute to a certain pick up and a broadening of economic activity. the latest data and indicators have not changed this assessment. according to eurostat ’ s flash estimate, real gdp grew at a quarter - on - quarter rate of 0. 3 % in the second quarter of this year, compared with 0. 4

and innovation held at the ecb two years ago, we established that despite the financial crisis, the retail payments business has been resilient, providing reliable and regular revenues. before the crisis, the fact that the retail payments business is a substantial source of revenue in banking, accounting for up to 25 % of total bank revenues, was often neglected. now, the observation that banks with a balanced business model have been in a better position to cope with the crisis has led to a better recognition of the importance of retail banking and retail payments. still, despite their resilience and stable nature, retail payments revenues cannot be taken for granted. they are under pressure from different directions : increasing competition, substantial investment needs to keep up with customer demands and technological progress, and a more decisive stance on the part of competition authorities. with regard to the pricing of payment products, payment service providers have to face the paradox that on the one hand, they are being pressurised to ensure more price transparency, and on the other, direct pricing would probably result in an increase in pricing that would neither be accepted by the customers nor by the regulators. the financial crisis has not only led to a better recognition of the importance of retail banking and retail payments : it has also sharpened the focus on banking governance. in recent years, many banks were giving increasing priority to the interests of the shareholders. consequently, it can be argued that the interests of the clients, and thereby of society as a whole, slipped too much into the background. in short, the public service function of banks, which is particularly relevant in the field of payments and loans, has been neglected. now, it is time for me to hand over to the panellists. i am interested to hear your views on the key issues relating to the transformation process of the banking business, in particular as regards retail payments. what are the prerequisites for and barriers to successful integration in the field of retail banking and payments? what does an efficient retail payments market look like? which governance models are appropriate to steer the retail payments market? bis central bankers ’ speeches