some of the world's largest banks, and one bank has been on the brink of failure. these enterprises have had thousands of highly educated and highly paid employees and managers at their disposal in order to avoid precisely such losses. the events have led to self - examination among financial enterprises and authorities who were too late to see the problems and take action. how could the situation get so much out of hand, and how can we prevent this from happening again? much has already been written about the background to the crisis. and i am sure that the course of events will be the subject of many learned papers in the coming years, relying on the advantages of hindsight. basically, financial business is all about forming a link between people who at a given time need to spend more than they own and earn and others who are in the opposite situation. this intermediation enables enterprises to invest in anticipation of future profits. it enables households to buy houses and flats with a down payment of only 20 per cent. and it enables governments to operate with budget deficits from time to time. financial intermediation – at its best – ensures that savers receive the optimum return with the chosen risk profile, and that the most profitable investments are sought. intermediation takes place across national borders, and the financial sector is at the forefront of globalisation. the importance of a well - functioning financial sector to a modern economy cannot be overrated. however, in recent years financial intermediation has expanded at an excessive pace, combined with sophisticated product development – and risk assessment systems and incentive structures have not been able to keep up in the competition for market shares. where this development led to an atmosphere of euphoria, greed and imprudence could prevail. some degree of caution is reintroduced when investors get too close to the fire and burn their fingers. however, other action is also required. it is a safe bet today that rules will be tightened. as the tide is turning, it is a question of striking the right balance between tightening the rules and safeguarding the role of financial intermediation in society. last autumn, the g7 countries asked the financial stability forum ( fsf ) – which includes the ministries of finance, central banks and financial supervisory authorities of major countries, among others – to analyse the factors and weaknesses that led to the crisis and propose solutions to boost the resilience of the financial markets and institutions. the results are interesting to read and ought to be compulsory for

in our supply chains. and we must not be blind to the fact that in a more unstable world, there may be good reasons from a security perspective why we in the eu, for example, should be able to produce more of the energy we need ourselves. or reduce our dependence on individual countries for raw materials and products that are important in many sectors. however, this must not become an excuse for classic protectionism and broad - based government subsidies. and our analyses show that small open economies are particularly vulnerable to such developments. the single market, globalisation and the danish economy we must always be aware of the benefits that denmark has gained from globalisation. many danish companies have excelled at taking advantage of globalisation, and in several sectors they have become leaders in the world market. at the same time, access to cheap imports has helped keep price increases down. it has also benefited employment, among other things. globalisation has helped increase productivity by allowing companies to locate their production where it is most efficient. at the same time, technological advances and innovation have spread faster globally because countries and companies have had to adapt to global competition. but if government subsidies and other trade barriers become more wide - spread it will reduce efficiency, increase costs and hinder innovation. all in all, this will result in lower productivity and real economic growth, both here in denmark and globally. this is in a reality where productivity in the eu is challenged and where fac - tors such as demographics and the green transition are already contributing to low structural growth in the coming years. the so - called draghi report contains many relevant proposals on what eu - rope needs to do to become more productive and competitive vis - a - vis the us and china. i would like to emphasise one proposal in particular. it is not that extraordi - nary, but it has great potential. 2 / 6 bis - central bankers'speeches the proposal is about improving the eu single market. we must remember that every time a member state has special rules in the eu, it has an economic cost. what we economists call negative externalities. the international monetary fund, imf, has found that trade costs within the eu are equivalent to an ad valorem tax of 44 per cent. the interstate trade costs in the us are equivalent to an ad valorem tax of 15 per cent. but removing barriers in the single market is a long haul. it is not a quick and easy solution. that is why it is crucial that