great challenges in terms of higher technical requirements, the necessity to achieve efficiency gains, and higher competitive stakes. i believe that market forces - rather than political pressure - should drive the consolidation process. the the giovannini group ( 2001 ) : cross - border clearing and settlement arrangements in the european union, brussels. many changes taking place also challenge oversight authorities. it is their task to analyse the systemic implications of what goes on particularly at the cross - border level, and to make sure that these changes will enhance, and not endanger, the soundness of the financial system. let me address these issues in the concluding part. implications for oversight authorities i begin by quoting alexandre lamfalussy, chairman of the committee of the wise men, which, more than a year ago, published the famous report on securities regulation within the eu. lamfalussy was very clear when he asserted that “ the current [ securities ] regulatory system is not working ”. indeed, unclear and sometimes even contradictory regulations or inconsistent implementation of regulations among countries impair the creation of a single capital market within the european union. starting from this premise, i would like to specify what kind of challenges oversight authorities face and share with you some ideas on what the role of an institution like the swiss national bank should be. but first of all, i would like to clarify a fundamental point. some people claim that the oversight authorities ’ objective of promoting the stability of the financial system hides an undue interventionist activism. well, these claims are beside the mark. let me quote andrew crockett, bis general manager and chairman of the financial stability forum : “ [ … ] systemic stability is critically determined by the collective behaviour of individual market players. [ … ]. and supervisors need to analyse the interaction between individual incentives and systemic outcomes. ” in other words, systemic stability depends on how negative externalities, which are not priced or internalised by the market, are dealt with. thus, we should not waste our time discussing whether regulatory intervention is necessary or not, but rather how oversight authorities, focusing on systemic risk, should shape the process. keeping this in mind, the challenges oversight authorities face are numerous and well - known. the giovannini group lists no less than 15 barriers to efficient cross - border and settlement procedures within the european union. these barriers are categorised according to their technical nature, their fiscal implications and their legal aspects. a remarkable feature of this report is the distinction between what market forces can achieve

increase – this level of prosperity. in the interests of innovation, flexibility and productivity, further adjustments are imperative. they must, however, take place in a manner that will not put at risk social cohesion. demands should be made on the individual, but they should not be excessive. the goal of our common effort is a development which assures security, freedom and general welfare in a balanced way. in the economic area, we must create the human and material conditions to promote appropriate growth, while keeping unemployment and inflation low. with regard to the human factor, the necessary qualification must be coupled with an adequate motivation. this motivation can be enhanced by an appropriate macroeconomic environment. a gradual development of economic and social activities seems appropriate, since this is the only way to ensure the necessary identification of individuals with the community. economic situation in the course of this year, prospects for economic recovery in switzerland have been improving, bringing to an end an unusually long period of stagnation. the human and material costs of this stagnation are of course regrettable. the causes for this period of stagnation are manifold. first, one has to bear in mind that it followed years of marked expansion. other, more general reasons are the consequences of our past labour market policy, which helped to maintain existing structures, as well as of insufficient competition in the domestic economy. last but not least, an already high level of achievement made it increasingly difficult to provide the necessary punch for change. the need for structural changes as well as the necessity to tackle remaining problems from the past – notably in the construction sector, in agriculture and tourism – along with the repercussions of a weak global economy, have led to a temporary decline in growth. a sustained process of adjustment, but also favourable monetary conditions have subsequently contributed to improve prospects. however, the impetus for take - off inevitably had to come from outside. our economic problems were, and still are, neither confined to a sector nor a region. the line separating positive and negative developments runs right across the economic landscape. it is still quality of performance, characterised by innovation, flexibility and productivity, which determines success. consolidating public finances remains important. furthermore, efforts to promote competition must continue even though considerable progress has already been made. in this context, we have to realize that in many quarters, people are obviously sceptical about the concept of competition. the argument has not yet sunk in sufficiently that when it comes to allocating resources, the free