markets, and notably their cross - border integration, will depend on europe ’ s success in giving itself a sounder, more complete and resilient economic governance framework. this effort is ongoing ; some steps have been taken, others are under way, but more will need to come. conclusions : restoring financial integration on a stable basis let me conclude. financial integration has made good progress in the eu, and particularly in the euro area, and has brought with it substantial benefits. however, recently, it has been severely affected by the crisis. the effect is unfortunately proving to be pervasive and persistent. the ecb ’ s measures targeted at financial markets have helped to mitigate the problem, but the problem is far from solved. hence, further action is needed. to restore and preserve financial integration, the euro area financial stability framework needs an urgent overhaul. despite important recent improvements, it is still marked by the cross - border openness of private financial markets and highly mobile capital flows on the one hand, and by the supervisory, regulatory and crisis management arrangements which, on the other hand, remain essentially national. this dichotomy is detrimental in two ways ; it prevents, in normal conditions, a reaping of the full benefits of the removal of barriers to cross - border movements of capital and financial services ; and it impedes, in crisis times, even - handed action to maintain financial stability that is consistent across the euro area. the resulting fragilities become more apparent under stress. it is now clear that these weaknesses in the eu ’ s crisis management framework, exposed during the crisis, are largely responsible for the partial re - nationalisation of several important financial market segments. significant reforms are already under way in the eu. the economic governance framework is being overhauled on the fiscal and macroeconomic sides. the establishment of the european financial stability facility and the european stability mechanism and the adoption of the “ six - pack ” are important milestones. also, financial supervision has undergone significant, though still partial, reform : three european supervisory authorities were established, and the european systemic risk board now adds a macroprudential perspective. regarding financial regulation, the current reforms address the need for stronger resilience, better infrastructure, and greater harmonisation of rules. the commission has also announced proposals in the area of crisis management and resolution. while these are important steps, more is needed for the euro area to break the link between fiscal imbalances, financial fragmentation and financial instability. europe

and perseverance are needed. effective poverty reduction requires that the recipient countries receive consistent support from donor countries, international financial institutions ( ifis ), and un organizations to help them pursue the right policies unswervingly for very long periods. angus maddison, the world economy : a millennial perspective, oecd 2001. james boughton, who ’ s in charge? ownership and conditionality in imf - supported programs, imf working paper wp / 03 / 191. i believe that if we follow through with the elements i have outlined, developing countries stand a reasonable chance to eradicate poverty. therefore, i do not think it is productive to constantly start new initiatives to fight poverty, which i also judge to be a sign that the involved parties are not willing to live up to their responsibilities. poverty will only be eradicated by economic growth, which also depends on integrating in particular african countries into the world economy and offering them fair and equitable access to markets in developed countries. trade is one of the best forms of self - help. therefore, it was very disappointing that the multilateral trade talks in cancun failed a few weeks ago. however, at the annual meetings of the imf and the world bank in dubai, there was a general consensus that the parties have to return to the negotiation table as soon as possible. ladies and gentlemen : next to the fight against poverty, i perceive the strengthening of the international financial architecture as a major challenge. since the asian crisis, the international financial system has undergone significant reform. an important outcome of these reforms has been the relative resilience of international financial markets to a series of shocks over the past three years : owing to the decisive intervention and cooperation of the federal reserve system and the eurosystem, september 11 did not produce a major financial crisis, the synchronised economic slowdown of major industrial countries has not led to any major stress in the financial system, and the financial meltdown in argentina did not entail any significant contagion except on uruguay, which proves that financial market agents may be pricing risk better and have become more discriminating without falling into irrational herding behavior. i see that particular progress has been made on three fronts : first, the international dialogue has been broadened and has been made more inclusive. the committees of the bis as well as the creation of the g - 20 have enabled emerging market countries ( emcs ) as well as developing countries to get involved in the