jean - claude trichet : financial services policy 2005 - 2010 - the ecb ’ s view speech by mr jean - claude trichet, president of the european central bank, at an exchange of views on financial services policy 2005 - 2010, european commission, brussels, 18 july 2005. * * * introduction i would like to thank the european commission for the invitation to participate in this important event. i am sure that all discussions today on the commission ’ s green paper on financial services policy in 2005 - 2010 will be highly beneficial for finalizing its thoughts on the matter, which will be reflected in the white paper to be issued by the end of this year. the definition of the main priorities for financial services policy in the years to come is an important milestone in the pursuit of further financial integration. although it should be recognized that financial integration in the eu has proceeded apace in recent years, in particular as a consequence of the introduction of the euro, further progress still needs to be made. while the objective of financial integration is inherent in the achievement of the single market, it is currently also extremely important in the context of the lisbon reforms. financial integration is a key factor in the development and modernisation of the financial system which, in turn, can lead to greater productivity and competitiveness, a more efficient allocation of capital and the potential for greater and more sustainable non - inflationary growth. for example, an empirical study by london economics1 estimated additional growth resulting from financial integration of the european bond and equity markets to be 1. 1 % over a decade or so. let me give you the views of the ecb on the proposals put forward by the commission, noting that the eurosystem is preparing a contribution on this subject, which will be issued shortly. i should underline that the interest of the eurosystem in the pursuit of financial integration is closely related to the tasks which have been given to it by the treaty, including the conduct of the single monetary policy, the promotion of smooth payment and settlement systems and the contribution to financial stability. i will start with some general considerations and then turn to some specific areas, notably financial regulation, financial supervision, and financial stability. general considerations speaking generally, let me express broad support for the key policy orientations set out in the green paper. over the next five years, financial services policy should aim primarily at consolidating and simplifying existing community legislation, while ensuring that the measures adopted thus far under the financial services action plan (

fsap ) are effectively and consistently implemented and enforced at the national level. behind this broad orientation lies the shared notion that the main efforts to remove residual legal and regulatory obstacles to the free provision of financial services in the eu have been achieved with the fsap. therefore the adoption of new community legislative initiatives should be evidence - based. the role of public intervention in regulating the eu financial sector remains important. first, developments in financial markets will always pose challenges to the existing regulatory framework that have to be considered. second, the consistent and correct implementation of fsap measures at the national level remains a challenging task for all authorities involved, notably the commission, national governments and supervisory authorities. third, the importance of the work of consolidating and simplifying the existing eu regulatory framework proposed by the commission should not be underestimated. indeed, this work represents a window of opportunity for rationalizing the existing london economics ( 2002 ), “ quantification of the macro - economic impact of integration of eu financial markets ”, report to the european commission. 1 / 4 rules applicable to financial institutions, especially those operating on a cross - border basis. it also involves the pursuit of synergies among the several eu public policies applicable to the financial sector, notably financial services, consumer and competition policies. if this process is successful, responsibility for promoting financial integration will then chiefly lie with financial institutions themselves, which should exploit the framework promoted by public authorities to expand their activity across borders. in this context, i would emphasise that this is also dependent on the ability of the financial industry to coordinate its members effectively whenever common initiatives are needed. this applies for instance in the areas of payment and securities clearing and settlement systems, where common infrastructures benefit cross - border transactions. in this field there is also a specific role for public authorities, notably to serve as catalysts for coordination among market participants, thus facilitating the emergence of market - led initiatives. one example is the role played by the eurosystem in the promotion of the single euro payments area – sepa – project, where the ecb, together with the european commission, strongly supports the integration of retail payments. financial regulation turning to the area of financial regulation, let me highlight three aspects. first, there is a need to proceed with the adoption of the remaining measures envisaged in the fsap in order to complete the regulatory framework. in this respect, from the ecb ’ s perspective, the planned legislative work in