great challenges in terms of higher technical requirements, the necessity to achieve efficiency gains, and higher competitive stakes. i believe that market forces - rather than political pressure - should drive the consolidation process. the the giovannini group ( 2001 ) : cross - border clearing and settlement arrangements in the european union, brussels. many changes taking place also challenge oversight authorities. it is their task to analyse the systemic implications of what goes on particularly at the cross - border level, and to make sure that these changes will enhance, and not endanger, the soundness of the financial system. let me address these issues in the concluding part. implications for oversight authorities i begin by quoting alexandre lamfalussy, chairman of the committee of the wise men, which, more than a year ago, published the famous report on securities regulation within the eu. lamfalussy was very clear when he asserted that “ the current [ securities ] regulatory system is not working ”. indeed, unclear and sometimes even contradictory regulations or inconsistent implementation of regulations among countries impair the creation of a single capital market within the european union. starting from this premise, i would like to specify what kind of challenges oversight authorities face and share with you some ideas on what the role of an institution like the swiss national bank should be. but first of all, i would like to clarify a fundamental point. some people claim that the oversight authorities ’ objective of promoting the stability of the financial system hides an undue interventionist activism. well, these claims are beside the mark. let me quote andrew crockett, bis general manager and chairman of the financial stability forum : “ [ … ] systemic stability is critically determined by the collective behaviour of individual market players. [ … ]. and supervisors need to analyse the interaction between individual incentives and systemic outcomes. ” in other words, systemic stability depends on how negative externalities, which are not priced or internalised by the market, are dealt with. thus, we should not waste our time discussing whether regulatory intervention is necessary or not, but rather how oversight authorities, focusing on systemic risk, should shape the process. keeping this in mind, the challenges oversight authorities face are numerous and well - known. the giovannini group lists no less than 15 barriers to efficient cross - border and settlement procedures within the european union. these barriers are categorised according to their technical nature, their fiscal implications and their legal aspects. a remarkable feature of this report is the distinction between what market forces can achieve

and what regulatory authorities should do. in particular, there are several issues that cannot be tackled by the private sector, e. g. the harmonisation of the legal, regulatory, taxation and accounting frameworks. a first challenge is the need for global oversight. this need arises from several factors. in terms of the so - called horizontal approach, trading, clearing and settlement of securities operations already occur in different institutions located in several different jurisdictions ; virt - x and sis - clear are just two examples. for the time being, cross - border infrastructures deploy their activities in complement to domestic systems, but it is very likely that they will play a significantly more powerful role in the future. oversight authorities tend to prefer a pragmatic approach, where one regulatory authority takes on the role of a lead overseer and consults with other relevant authorities. such a model has already been put in place among central bankers in the context of the continuous linked settlement system. a second challenge that oversight authorities face lies in the risk dimension of cross - border securities operations. indeed, whereas the nature of the risks remains basically the same, both the probability of occurrence of an adverse event and the risk exposures themselves have clearly increased. the added dimension of cross - border activities lies in spill - over effects due to direct links between systems. credit, liquidity and operational risk events occurring in one jurisdiction may indeed trigger a systemic crisis by spilling over to foreign financial markets. these kinds of linkages among different systems explain why oversight authorities have recently focussed not only on payment systems, but also on securities clearing and settlement systems. a problem that is potentially relevant in systemic terms is the availability of intraday liquidity in foreign currencies, which is typically restricted, if not non - existent. this restriction hampers liquidity management in an integrated multi - currency environment. nowadays, there is a much more urgent need for market participants to make time - critical payments than previously. moreover, they must be the committee of wise men ( 2001 ) : final report of the committee of the wise men on the regulation of european securities markets, brussels. a. lamfalussy ( 2001 ) : “ reflections on the regulation of european securities markets ”, societe universitaire europeenne de recherches financieres, suerf study n° 14, vienna. a. crockett ( 2002 ) : introductory speech at the third joint central bank research conference on risk measurement and systemic risk, basel. able to