convergence provided by this approach, and i think the results will be positive. now it may be that over the longer term, the current structure is judged to be insufficient to meet the needs of a more integrated market, and that a more fundamental re - think of the organisation of eu supervisory responsibilities is necessary. i personally think that this debate will intensify in the next decade. but we would certainly need to proceed with great caution in this debate. i am a firm supporter of the idea that changes should only be made if clear problems are identified. but whatever happens, i think the solutions we have to look for should be cooperative in nature, embracing the needs of all eu member states. this would, in my view, be preferable to an approach which would tend to concentrate responsibilities in the hands of a few member states while the implications of their actions would extend far beyond their borders. taking a more inclusive approach is the way that we have found solutions in the past to european challenges, and i think it is the best way forward. eu - wide financial stability is of interest to all of us. against the background that i have portrayed in my previous comments, it is clear that central banks have a genuine interest in improving their understanding of how the objectives of financial integration and financial stability, or even macroeconomic stability, interact with each other. i already mentioned that this is an area which is under - researched. two years ago, the network on capital markets and financial integration in europe identified this gap and decided to include the relationship between financial integration and financial stability in a list of the network ’ s priority areas, posing a series of stimulating questions aimed at providing some guidance for researchers ’ efforts. i think it is useful to recall the five questions posed by the network : - first, how can financial regulations be designed so as to be conducive to integration while still ensuring financial stability? - secondly, what are the main links between financial integration and contagion? - thirdly, what are the mechanisms that can trigger contagion and financial fragility? - fourth, how does competition in the financial services industry affect the ability of the financial system to withstand shocks? - and finally, how and to what extent do financial crises affect economic activity? as you will have realised, there is an almost perfect correlation between these questions and the main topics of the different papers that make up the excellent and well - balanced programme that the organisers have put together for this conference. this is important

miguel fernandez ordonez : financial integration and stability in europe opening remarks by mr miguel fernandez ordonez, governor of the bank of spain, at the conference on " financial integration and stability in europe ", organised by the bank of spain, the european central bank and the center for financial studies, madrid, 30 november 2006. * * * good morning ladies and gentleman. first of all, allow me to welcome you. we are really delighted to host this conference at the banco de espana in madrid. some of you are perhaps too young to remember, but it was here in madrid, in 1989, that the european council decided to embark on the first stage of economic and monetary union, as envisaged in the delors report which was the catalyst for the emu process. i would like to start my intervention today with a quote from the delors report ; a quote that refers to financial integration. simplifying, it said the following : the objective of a single financial area, in which all monetary and financial instruments circulate freely, and banking, securities and insurance services are offered uniformly throughout the area, would be fully implemented through the approval and enforcement of the necessary community directives. you can appreciate the appealing simplicity of its definition of an integrated financial market : one where all monetary and financial instruments circulate freely, and where banking, securities and insurance services are offered uniformly. nevertheless, the word “ uniform ” might sound a little strange to us today, when we prefer to use softer terms such as “ convergence ”. but of course mr delors was not thinking about uniformity of the services themselves, but rather about the need to ensure that they could be offered and accessed on an equal basis across the eu. but what it is remarkable is that mr delors was referring to the steps that should be taken in stage one of emu. he expected the integrated financial market to be in place at the beginning of the emu process, before going to the subsequent stages. almost seventeen years have passed since stage one was launched. and we entered stage three almost eight years ago. emu has proved to be a successful reality, but the single financial area as defined in the delors report has not yet been fully achieved. of course, there has been impressive progress in some areas, for instance, the european money markets. and there has been good progress in others, like corporate bond markets and government bond markets. in some fields, however, we are a long way from