ten years in the euro area, compared with a little more than 2 % in the us. the reasons for the economic slowdown in the eu are manifold, and the lisbon agenda underlines the need for a multi - faceted approach. one of the main goals of the agenda is to foster financial integration in the eu. indeed, research expects financial integration to be associated with a quantitatively significant “ growth dividend ”. for example, an often cited study by london economics ( 2002 ) estimates the benefits of the integration of european bonds and equity markets to be around 1 % of real gdp over a ten - year period. while such figures can always be subject to estimation error, economic reasoning suggests that the overall benefits of financial integration are significant. first, financial integration is a key factor in the modernisation of the financial system : the integration process fosters competition, the expansion of markets and intermediation, thereby leading to further financial modernisation. second, as a central banker, i take a natural interest in financial integration because a well - integrated financial system contributes to a smooth and effective implementation of monetary policy throughout the euro area. for both reasons, we should not content ourselves with the present degree of integration in eu financial markets, which still varies widely depending on the market segment : integration is furthest advanced in market segments close to the single monetary policy. bond and equity markets are fairly integrated. however, local factors continue to have some influence on demand and on returns, especially in equity markets. retail banking, in particular, remains highly fragmented and financial infrastructure services are lagging behind. both areas are still among the least integrated parts of the european financial system. the completion of the single market in the domain of financial services is crucial as only a fully integrated financial system will be able to reap all the benefits brought by financial modernisation. 3. 2 financial modernisation additionally, financial sector performance in the eu can be further improved by addressing other aspects of financial modernisation as well. it is essential that all aspects of financial systems keep pace with the rapid and ongoing changes in today ’ s global financial architecture. this is a great challenge even for industrialised countries. this morning, philipp hartmann highlighted several useful factors which are vital for a smooth functioning of financial systems. they ranged from financial innovation to transparency, corporate governance and financial regulation. needless to say, his approach – based on a comparison of indicators – must be considered with care and its results should not be overinterpreted

zeti akhtar aziz : expanding asean - eu economic links - the role of the euro speech by dr zeti akhtar aziz, governor of the central bank of malaysia, at the euro conference a€œexpanding asean - eu economic links - the role of the euro ", kuala lumpur, 14 july 2005. * * * your excellency ambassador thierry rommel, head of the eu commission delegation in malaysia, your excellencies, distinguished guests, ladies and gentlemen, good morning. it is my great pleasure to welcome you to the " euro conference : expanding aseaneu economic links - - the role of the euro ". bank negara malaysia is indeed honoured to co - host this event and would like to especially thank the european commission for the opportunity. the purpose of this conference is to bring together recognised experts to discuss the important issues affecting economic, monetary and financial interests in asean and the eu. i believe that the exchange of ideas and views over the next two days would contribute towards an increased understanding of the developments and issues important to our respective regions. our agenda is for the further strengthening of the close asean - eu partnership that offers mutually reinforcing benefits to both regions. it is our hope that this conference would serve as a catalyst to promote greater appreciation of the potential for an expanded asean - eu economic relationship - a relationship in which trade and investment flows between our regions can be enhanced. the asean - eu partnership has developed steadily over time through a number of well - established forums. this has taken place in a global environment in which the world economies and financial systems are increasingly becoming more integrated. as a result, it can be expected that there is increased interdependence, events that take place in one part of the world will have implications on other parts of the world. this is likely to be more pronounced in the asean economies and financial systems, given their openness and their high degree of integration with the global economy and international financial system. as the asean and the eu continues to evolve as strategic partners, new opportunities can also be realized. an enhanced relationship will also contribute towards more effective management of the new challenges in the ever - changing global environment. indeed, this conference takes place at an important time when it becomes even more constructive and meaningful for our two regions to strengthen our associations, our inter - linkages and our relationships. learning from the experiences of the eu ladies and gentlemen, the unification of europe on many fronts is a major structural enhancement to