Indeed, the “Lamfalussy” process has proved to be effective with a readjustment of the content of the texts between the legislative and regulatory levels and a shortening of the timeframe for the adoption of directives. The four-level regulatory approach of the Lamfalussy procedure is now fully operational, with the two bodies in charge of “comitology” - the European Securities Committee (ESC) and the Committee of European Securities Regulators (CESR) - working on the preparation of measures to implement directives, sometimes in parallel with the political negotiations. As I have mentioned it earlier, the Financial Services Action Plan (FSAP) has endowed Europe with a coherent and market responsive regulatory framework. Up to now, 34 out of the 42 initially proposed measures have already been finalised, and I would like to remind you how impressive were the progress made in implementing the Financial Services Action Plan over the last six months: in addition to the directive on market abuse, adopted in January 2003, the directive updating the accounting provisions of the fourth and seventh Company Law directives and the directive on pension funds were adopted at the beginning of May 2003. Moreover, in February 2003, the European Council and Parliament agreed on a common position on the draft directive on prospectuses, which is expected to be adopted during the course of the year, as will probably be also the directive on taxation of savings income and even the new directive on take over bids.
An independent study carried out for the European Commission concluded in November 2002 to a significant macroeconomic positive impact in the long run of a full integration of European financial markets, not only in terms of GDP, but also in terms of business investment and employment. Needless to say, as a central banker, I attach great importance to financial markets integration: the implementation of the single monetary policy would not have been possible without an efficient and fully integrated money market. A high degree of integration of the securities market is also required because central banks’ credit operations are fully collateralised and rely heavily on the smooth transfer of securities. Moreover, efficient and integrated markets favour a homogenous transmission of monetary policy actions across the euro area. So where do we stand today? I think it is fair to recognise that significant progress has been made already in the integration of European Capital Markets. At the same time, one has to acknowledge that integration is an on-going process, that faces renewed challenges in a constantly evolving environment. Let me elaborate on these two aspects successively. 1. European capital markets already exhibit a high degree of integration  If one stands back and compares the organisation, functioning and structure of European financial markets today with the situation that prevailed five years ago, the magnitude of the changes that already took place is striking, not only in the various market segments but also in their infrastructures: indeed, the euro area already benefits from highly-integrated capital markets.