, will be the object of an extensive assessment as regard their impact on both the banking sector and the broader economy. this assessment should result in appropriately calibrated global standards, which will promote a more sustainable trade - off between financial stability and balanced long - term growth. beyond the prudential framework, the relevant organisations are actively conducting work in other crucial areas where co - ordination remains key, most notably : ( 1 ) the development of a framework for macro - prudential supervision, ( 2 ) devising effective mechanisms to address the moral hazard problem and the risks posed by “ too big to fail ” institutions, and ( 3 ) legal regimes to allow an ordered resolution of complex financial institutions. the global financial crisis requires a global response and the recent initiatives i just mentioned are clear illustrations of this. at the same time, i believe that in europe we have to go much further in our response, not in the least because the european countries are much more interlinked with each other than with the rest of the world. economically, financially and institutionally the setting is indeed very different, since it is most clearly epitomised by the presence of the single market and the single currency. fortunately, policy makers in europe quickly realised that there was an urgent need for quick, bold and coordinated responses. i want to single out two very important initiatives in this respect : • the adoption of the ecofin roadmap of 20 october 2009 on financial supervision, stability and regulation. • the proposals for a new supervisory framework in the eu based on the recommendations by the so - called de larosiere group which were published in september last year. 11 the ecofin roadmap is an ambitious set of policy priorities adopted by the council in the wake of the financial crisis, with the aim of strengthening financial supervision and regulation in the eu. the international initiatives i mentioned earlier fit well into the framework implied by the roadmap, but, at the same time, the latter goes significantly further. for example, regarding the issue of the colleges of supervisors that i mentioned earlier, the committee of european banking supervisors ( cebs ) is additionally developing common operational de larosiere group, 2009, “ report of the high level group on financial supervision in the ue chaired by jacques de larosiere ”, february. guidelines and a common risk methodology. indeed, in a single banking market, a common approach is a necessity to avoid inconsistencies and regulatory arbitrage. a mandate for

jose manuel gonzalez - paramo : globalisation, international financial integration and the financial crisis – the future of european and international financial market regulation and supervision speech by mr jose manuel gonzalez - paramo, member of the executive board of the european central bank, at the institute of international and european affairs, dublin, 19 february 2010. * * * introduction 1 i would like to thank the institute of international and european affairs for organising this conference and for giving me the opportunity to speak in front of such a distinguished audience. i am particularly glad to be able to participate in the institute ’ s series of speeches dedicated to the theme of “ fixing finance ”. both the prominence of the subject and the high quality of past contributions have made this series of speeches an important source of interesting ideas and proposals on how to render our financial systems more stable and resilient. following the nature and objective of the series, i will dedicate part of my address to the issue of the future framework for european and international financial market supervision and, in particular, to the role of the ecb in macroprudential supervision in the european union, but first let me briefly discuss the relationship between international financial integration and the financial crisis. international financial integration and the financial crisis over the past decade or so, financial crises seem to have become more frequent and perhaps more disruptive than in the past. they also seem to propagate more rapidly. this experience has spurred intense interest among academics and policy - makers in understanding the link between financial integration and crises, and in better assessing the merits of financial integration in general. the debate on the benefits of international financial integration is certainly not uncontroversial : • one extreme opinion sustains that integrated financial systems improve the allocation of productive resources, foster entrepreneurship and innovation, enhance market discipline, and help countries to insure against macroeconomic fluctuations. • at the other extreme, it is argued that the free flow of capital widens the wealth gap between rich and poor countries and exposes domestic financial systems to the risk of instability. 2 more recently, the financial crisis of 2007 – 08 and its aftermath have shown that increased geographical interconnection among financial markets and the deepening of cross - market integration, when coupled with the under - regulation of securitisation and other banking activities as well as with significant complexity in the design of financial instruments, may i am grateful to frank dierick, alex popov and marco protopapa for valuable inputs. fecht, f.