businessmen and politicians. this will be supported by the relatively “ young ” population – in many arab countries more than 50 per cent of the population are younger than 20. this in itself provides for a rising competiveness and creativity in the economy. ii having this in mind europe may be of special interest for arab countries for two reasons : first, as a potential partner for economic cooperation and second, as an example of successful integration. the main development for financial markets in europe has been the launch of a new currency, the euro. the financial sector in europe benefits to a large extent from the monetary union and the evolution of a single european financial market. that implies greater transparency, more competition and more liquidity. germany as a financial centre benefits from this – in everyone ’ s interests. functioning, liquid and sound financial markets steer capital towards those areas of the real economy where it brings the highest yield. in this way, they contribute to improving welfare, strengthen the economy and create jobs. the ecb, as a constituent part and the centre of the european system of central banks, is domiciled here in frankfurt. this has positive implications for germany as a financial centre. it does strengthen the self - confidence of the credit institutions located in frankfurt, and – at least every fortnight – it draws the attention to frankfurt when the meetings of the governing council of the european central bank take place. this is where european monetary policy decisions are taken. the direct advantages of the monetary union are increasingly being appreciated. it is no longer possible for exchange - rate fluctuations to distort competition. there is no longer a need for the economy to engage in hedging activities in cross - border trade and foreign direct investment. transaction costs in the markets have diminished, and prices are directly comparable. these are advantages not only for the economy, but also for every citizen – advantages which make themselves felt for every transaction, every trading operation, every trip abroad. the question arises as to whether the introduction of the single currency has led to the development of a single, enlarged european financial market. it is precisely in this area that much was expected from the euro – when compared with the us financial market. regarding the money market, these expectations have undisputedly been met. the individual national money markets in the euro area have rapidly combined to form a single euro money market. the capital markets are changing somewhat more slowly. on the capital markets the euro is not the only factor promoting change. the trends towards global

currently. 2 • economic and financial globalization has been one of the main characteristics of the world economy in recent years. this has been the source of many benefits, but it has also been accompanied by new challenges. in particular, as the global financial crisis ( gfc ) has clearly shown, the growing interdependence that has resulted from globalization means the economic problems of one country can be rapidly transmitted to others. in this context, policy options that are apparently reasonable shares based on ppp ‐ adjusted figures for gdp. figures provided by, or calculated with data from, international monetary fund ( 2015 ) : world economic outlook database, october. see also mohan, rakesh and muneesh kapur ( 2015 ) : “ emerging powers and global governance : whither the imf? ”, imf working paper no. wp / 15 / 219, october. bis central bankers ’ speeches at the national level are not necessarily so when adopting a global vision. therefore, a highly globalized world presents the typical prisoner ’ s dilemma, where a non ‐ cooperative approach leads to poorer results for all the parties involved as opposed to one based on cooperation. in other words, the nature of today ’ s challenges underscores the need for a framework of global governance with a much higher level of cooperation and, consequently, a level playing field. • the gfc brought to the forefront many of the limitations of the governance framework in place. to start with, it showed that contrary to the then prevailing views, advanced economies ( aes ) are at least as vulnerable to crises as emes. it also made clear that no effective mechanisms were in place to ensure consistency between the economic policies in the main advanced countries and global economic and financial stability. naturally, this gave rise to serious concerns about the legitimacy of the existing global economic governance arrangements. to put it in jean ‐ claude trichet ’ s words, “ … the industrialized countries have proven particularly clumsy in their handling of global finance before the crisis at a time when their responsibility in global governance was obviously overwhelming. there was therefore no reason to confirm their exclusive prime responsibility ”. 3 the gfc sparked an effort of cooperation of the international community, unprecedented in terms of its complexity and reach, which allowed to prevent the collapse of the global financial system. in addition, as a result of the crisis, major steps were taken to adjust the global economic governance structure. in particular, emes were given a more prominent role in the global decision