of crises has to be the paramount consideration. nevertheless, we also have to be prepared for the worst. what has to be done in the event of cross - border crises? who has to be informed? where can we meet? naturally, responsibility initially rests at the national level. i believe, however, that the bsc, in which central bankers and regulators are already represented, is a suitable platform for multilateral crisis management. proximity to the ecb is proving to be an advantage, since the ecb can provide the required infrastructure. central banks can play a major role in crisis management - something which is also shown by the example of the new york fed in the case of ltcm. another area of current relevance in the work of the bsc - as well as of other supervisory bodies within the eu - is the convergence of supervisory practices. great progress has been achieved in harmonising banking supervisory law. even so, there still exist noticeable differences in practice. furthermore, mention should also be made of the ( informal ) groupe de contact and the banking advisory committee in brussels. these bodies that already exist are doing a good job. they could be pacemakers for the ongoing harmonisation of prudential regulations and, above all, of supervisory practices which still diverge too widely in some cases. a centralised european banking regulatory body is not necessary for that purpose, nor would such a body be able to cope with the requirements of the present financial market structures. why? • the national supervisors are more intimately acquainted with the economic and legal framework in which their own banking systems operate. even with a centralised solution, they would have to continue to perform their present duties in order to prevent losses of efficiency in the regulatory process. • despite the tendency to convergence, the national banking systems will continue to differ from each other for the foreseeable future. in other words, the integration of the european banking systems is not yet far enough advanced for policymakers to respond with institutional reforms at present. regulators should follow the market structures as they develop. they should not attempt to steer the market structures in a particular direction. europe is not yet sufficiently integrated politically for it to be possible to ensure the effectiveness and efficiency of a centralised european supervisory body. it is difficult to imagine centralised banking supervision in europe without having first achieved a political union in major areas such as taxes or legal and fiscal policy. sovereign interventions on the part of a centralised authority involving, say, the closure of a bank or a decision

ernst welteke : regulating european financial markets speech by mr ernst welteke, president of the deutsche bundesbank, at the frankfurt european banking congress, held in frankfurt, on 17 november 2000. * * * i ladies and gentlemen, “ what are the essential features of an efficient regulation of the financial markets in europe? ” that is a question which cannot be answered in a single sentence. nevertheless, it is possible to specify elements which form an indispensable part of a modern regulatory framework. these include : 1. rules for the markets and the participants - rules which are in line with market conditions and, at the same time, underpin the stability of the financial system. 2. organisational forms of financial market supervision which should mirror market structures, but not run ahead of them. 3. supervisory practices which - especially in europe - have to be harmonised even more closely in order to improve and safeguard the “ level playing field ”. 4. a sufficient quantity of highly qualified experts in the field of supervision. globalisation, technological progress and international competition are the trends that are shaping all the financial markets - and, of course, the stock markets in europe. the stock markets are engaged in fierce competition with each other. issuers and investors want a liquid market that is efficient, secure and as cost - effective as possible in terms of both trading and settlement. alliances or even mergers are strategic options for strengthening competitive positions. these changes are taking place in a setting where there is comparatively little harmonisation in the regulatory environment provided by securities and stock exchange law. relatively new competitors have recently been entering the field in the shape of electronic communication networks ( ecns ). these are electronic trading platforms but are not licensed stock exchanges. in terms of turnover, these ecns do not play a major role at present but, even so, there arises the problem of competition between licensed and regulated stock exchanges and the scarcely regulated ecns. in my view, it is very important for a “ level playing field ” to be created in this area. given this dynamic setting, analysing the present system of securities and stock exchange supervision in europe is both prudent and necessary. the group of financial experts under the direction of baron alexandre lamfalussy has presented an interim report which is to be discussed in the near future by the ecofin council. without wishing to pre - empt that discussion, a gradual approach appears to me to be a solution that is both prudent and