, or impose reorganisation measures. central banks may take actions aiming at restoring normal liquidity conditions in money markets or at ensuring the smooth operation of market infrastructures. finally, the third component, namely crisis resolution, relates to the arrangements aiming at an orderly handling of a financial institution facing solvency problems and the protection of the rights of creditors, notably depositors. in this case, treasuries have also an important role to play if and when the injection of public money is required. there is evidently a close interrelation between these three components of the financial stability framework. for instance, the effectiveness of crisis management and resolution largely depends on the existence of an efficient supervisory and central banking framework able to identify and react at an early stage to potential threats to financial stability. conversely, the effectiveness of supervisory action depends also on the existence of appropriate arrangements to support an orderly exit from the market by insolvent institutions. indeed, the fact that institutions could exit the market if they are affected severely by a crisis provides a powerful incentive for them to optimise risk management and draw up proper business plans. at the eu level, a key element is the cross - border dimension which characterises all three components of the financial stability framework. this dimension calls for a smooth and efficient cross - border interplay within and among the set of authorities involved in crisis prevention, management and resolution. in this respect, as a general observation, i would only say that the existence of the eurosystem provides an extremely strong and effective decision making in the area of central banking, while the level 3 committees are expected to develop their own cooperative network in the field of supervision. 2. key developments in the european financial system against this background, let me point out that the european financial system has experienced fundamental developments in the past years, which have a particular bearing on the eu financial stability arrangements. i would like to highlight three of them. first, the overall progress in european financial integration. the ecb ’ s analysis, conveyed through our annual report “ financial integration in europe ” demonstrates that financial integration has advanced significantly since the introduction of the euro at the level of financial markets, market infrastructures and financial institutions. progress has however differed considerably across market segments. the euro area money market has been strongly integrated since the introduction of the single currency, supported by the integrated market infrastructure for large - value payments. as to the wholesale banking segment, there are clear indications of strong progress in financial integration as well. for example, the

, not restricted to a comparison of the current growth in m3 with the reference value, rather it incorporates a much broader approach. because, in order to be able to interpret monetary developments accurately, it is crucial to know the precise reasons for these developments. this means that, in addition to the broad monetary aggregate m3, the individual components of m3 and the counterparts to money, in particular the dynamics of loans to the private sector, must be analysed in respect of their implications for future price developments. allow me to briefly explain why a detailed analysis of the forces behind monetary developments is so important. not every increase in m3 growth in excess of potential growth has an effect on consumption and hence, necessarily poses a threat to price stability. greater dynamics in monetary developments can, particularly in the short term, be attributable to portfolio movements for example, which are temporary and therefore tend not to be a problem for inflationary developments. this was probably the case in the first few months of 2001 when the uncertainty on the stock markets temporarily increased the attractiveness of short - term secure assets. the aim of the analysis must, therefore, be to trace the growth in m3 back to its underlying factors in order to assess the extent to which some components of the monetary developments are not relevant for future domestic price developments. the revisions to m3, which the ecb made in its publication of monetary data for april, should also be considered in this light. the ecb has recently come into the position to indicate the extent to which money market fund shares / units are held by non - euro area residents and to exclude these shares / units from m3. all national central banks ( ncbs ) in the euro area now regularly report data on the money market fund share / unit holdings of non - euro area residents in accordance with the general reporting obligations in the context of money and banking statistics. from a conceptual point of view, m3 should only capture the money holdings of households and firms located in the euro area. above all, these have close links with domestic private consumption and to domestic price developments. the money holdings by non - residents are, by contrast, likely to be used more for portfolio purposes. these revisions should bring back the monetary aggregate m3 closer to its theoretical concept, thereby tending to strengthen the information content of m3 for domestic price developments. purchases of money market fund shares / units by non - euro area residents increased following the start of stage three of emu, whereas previously they had been of very little importance.