euro. the amount outstanding of long - term debt securities issued by the private sector was 22 % higher at the end of 2000 compared with the end of 1998. probably the most significant development has been the rapid growth in the euro - denominated corporate bond market, which has increased several - fold in size since the launch of the euro and is now characterised by issues of above eur 1 billion. emu has also stimulated integration in the stock markets in the euro area, where structural developments have been dominated by a series of high - profile mergers and attempted mergers. regulatory framework the rapid growth achieved by european securities markets has taken place notwithstanding remaining regulatory obstacles to their integration. the european authorities are fully aware of the need to address this problem. several obstacles have been identified in the recent report of the committee of wise men, chaired by alexandre lamfalussy. the committee proposes to speed up the removal of impediments through the institutionalisation of two new regulatory committees for securities markets, which should allow for an increased harmonisation of securities regulation and less burdensome procedures for adapting community rules to rapidly changing financial markets. another essential european initiative was the adoption by the commission, in may 1999, of a programme for the completion of the single market for financial services. this programme, the financial services action plan, lists a series of measures with indicative priorities and timetables. the project considered as a whole and its inherent philosophy are capable of enhancing economic growth. in this perspective, a handful of specific initiatives deserve a particular mention. a first initiative is the adoption of the european company statutes, which is essential to enhance the level - playing field between european firms and to provide a suitable legal framework for transnational conglomerates. a second important aspect is the risk capital action plan, which would help redirect financial flows towards fast - growing small and medium - sized enterprises. let me also mention the last four initiatives, namely the e - commerce policy for financial services ; the harmonisation of rules on the accounting requirements for european companies ; the takeover bids directive ; and finally the removal of accounting, legal and fiscal discrepancies hindering the cross - border use of collateral. a european directive on this subject should be adopted in 2003. many of these initiatives may appear to be unimportant and somewhat " esoteric " regulatory changes. however, they can provide a real boost to the smooth operation of markets and, therefore, to economic growth. for example, obstacles to the cross - border use of

collateral prevent the further cross - border integration and consolidation of clearing and settlement infrastructures, thus hindering the integration of european money, bond and equity markets. a smooth electronic integration of trading, clearing and settlement operations would help reduce transaction costs substantially. the gradual dismantling of regulatory obstacles to remaining market integration in europe will contribute to enhancing their depth and efficiency, in turn contributing to an improved allocation of funds to the most profitable investment opportunities, and thus supporting economic growth. what is the role of monetary policy and central banks? price stability the interaction between financial markets, economic growth and monetary policy is by no means a new issue for central bankers. however, financial market developments have brought the question to the forefront of the policy debate. the continued integration and deepening of financial markets is a significant issue for policy - makers, and particularly for central bankers, since smoothly functioning and efficient financial markets are crucial in ensuring a smooth transmission of monetary impulses. the best contribution that monetary policy can make to the smooth functioning and integration of european financial markets and to economic growth is to maintain a steady medium - term price stability orientation. such a policy will be beneficial, as it will minimise the adverse effects of inflation and high inflation uncertainty. as we all know, price stability is beneficial in numerous ways. it not only creates a climate for higher economic activity over the medium term, but also reduces the economic and social inequalities caused by the asymmetric distribution of the costs of inflation among the various economic agents. in addition, in an environment of low inflationary expectations, inflation risk premia become relatively less important as a determinant of financial prices. as a result, other factors such as credit risk can play a larger role in the price formation mechanism. ultimately, this results in a more efficient allocation of financial resources. the approach of focusing on price stability is by now the conventional wisdom in industrialised countries. in the case of europe, this consensus on the contribution of price stability in the medium term to promoting long - term growth is explicitly enshrined in the statute of the escb, which states unambiguously that " the primary objective of the escb shall be to maintain price stability in the medium term. " the ecb is convinced that by rigorously fulfilling this mandate, monetary policy is making its most effective contribution to the realisation of strong output growth and satisfactory employment prospects. financial stability and the role of central banks in banking supervision also the design of prudential