axel a weber : discussion of “ emu and financial integration ” by philip lane and on “ financial integration and risk sharing : the role of the monetary union ” by sebnem kalemli - ozcan et al. comments by professor axel a weber, president of the deutsche bundesbank, at the fifth ecb central banking conference “ the euro at ten : lessons and challenges ”, frankfurt am main, 13 november 2008. * * * introduction the euro at ten can justifiably be called a success story, and increasing financial integration in the euro area is a striking example of this. i am therefore pleased to comment on the two very interesting and insightful papers presented by philip lane and by sebnem kalemliozcan, simone manganelli, elias papaioannou and jose luis peydro. professor pagano has already given some helpful and meaningful comments on the papers. in my comments, i shall first concentrate on philip ’ s reflections on emu and financial integration and add to them some findings for germany. second, i shall discuss some issues raised by sebnem kalemli - ozcan et al. in their paper on the role of the monetary union for financial integration and risk sharing. philip r. lane : “ emu and financial integration ” philip lane : emu and financial integration z provides broadly based evidence that the first 10 years of emu have seen a remarkable increase in financial integration z many barriers to full integration still remain, but initiatives are under way to remove obstacles in the financial infrastructure z the eurosystem is supporting these projects ( sepa, target 2, t2s ) z challenges a number of general predictions about the macroeconomic impact of financial integration on the financial development of euro - area countries, international risk sharing and net capital movements 13 november 2008 comments on papers by p. lane and s. kalemli - ozcan et al. 3 of 10 philip lane ’ s paper builds on his extensive research on emu and financial integration, and presents us with a comprehensive and well structured overview of recent research and market developments. the paper provides broadly based evidence that the first ten years of emu have seen a remarkable increase in financial integration, even if the extent of convergence varies across different sectors. philip notes that there are still many barriers to full integration, but that initiatives, such as sepa, target 2 and t2s should remove some of these obstacles. this is why the eurosystem is actively supporting

, however, a lack of access to equity financing is a key factor holding these firms back. advancing the capital markets union must therefore be a cornerstone of the eu's competitiveness strategy. significant efforts have been made over the past decade to move forwards, and i want to pay tribute to the role the european parliament has played in promoting an ambitious, european approach. but vested interests and competing national priorities have hampered progress. now, at the beginning of a new legislative term, we are at a crossroads. the current political momentum needs to be converted into a concrete agenda with clear priorities. and this agenda must be swiftly followed up with genuine actions. 3 / 5 bis - central bankers'speeches the ecb's governing council laid out its priorities for european capital markets in a statement in march. 2 let me highlight three key areas where progress is essential. first, we must improve the way we save in europe. in 2022, european household savings exceeded eur 1. 1 trillion. 3 however, around a third of these savings are held in deposits4 – significantly more than in the united states. mobilizing even a small portion of these funds and investing them in european capital markets could greatly contribute to the more than eur 700 billion needed annually to achieve the eu's key strategic objectives. this is also likely to provide better long - term returns for our citizens while improving european companies'access to equity finance. second, we need a single regulatory and supervisory ecosystem that promotes market integration. and third, for eu capital markets to be more attractive to investors and issuers, they need to achieve greater scale and depth. this can only happen through integration – especially in our trading and post - trading infrastructure. conclusion to conclude – the world is changing rapidly, and europe is falling behind. the diagnosis and the remedy are clear – the eu must come together and address its structural challenges to increase its competitiveness. advancing the capital markets union is an important part of this agenda, but not the only one. significant efforts to boost europe's economic resilience and decarbonise the economy will also be needed. this will require substantial investment in the coming years, which needs to come from both private and public sources. progress in these areas will not only enhance europe's ability to withstand future economic shocks, but also help the ecb to maintain price stability. as jacques chirac once observed, " the construction of europe is an art. it is the art of the possible. "