5 In sum, a lot has been achieved in the past, not the least through the introduction of the euro, but more needs to be done in the future to reap the full benefits of the Single Market for Financial Services. Let me now mention some examples where we have focused our efforts to contribute – within the realm of our competencies – to improving financial integration and where we plan further work. We tend to group our efforts relating to financial integration in four types of activities: (i) giving advice on the legislative and regulatory framework; (ii) acting as a catalyst for collective private sector initiatives; (iii) enhancing knowledge and raising awareness; and (iv) providing central bank services. I select examples from each group. 3  Giannetti and Ongena (2007), Lending by example: direct and indirect effects of foreign bank entry in emerging markets, mimeo., Tilburg University. 4  Abiad, Leigh and Mody (2007), International finance and income divergence: Europe is different, IMF working paper, WP/07/64, March. 5  Baltzer, Cappiello, De Santis and Manganelli (2007), Measuring financial integration in the new EU member states, mimeo., ECB. 2  BIS Review 17/2008  As regards legislative and regulatory advice, the Eurosystem was fully involved in the review of the Lamfalussy framework that took place at the end of last year and published a contribution to the assessment regarding the banking sector.
We generally share the broad agreement among EU bodies that the Lamfalussy framework has significantly increased the efficiency and effectiveness of financial regulation and supervision in the EU. At the same time, however, a number of further improvements seem warranted to reap all the benefits. First, increased regulatory convergence is called for, in particular for reducing national options and discretions in EU directives. Indeed, the inconsistent implementation as well as the “gold plating” of EU rules at the national level give rise to significant compliance costs for financial institutions operating across borders. Second, we need to strengthen the basis and decision powers of the “level 3” committees of supervisory authorities pursuing supervisory convergence and cooperation Third, further improvements in the arrangements for the supervision of cross-border financial groups should be achieved. All authorities need to be adequately informed to effectively perform the ongoing supervision of cross-border institutions as well as to be fully prepared to address potential cross-border situations of financial distress. Given the increased scope and intensity of the cross-border activities of EU banking groups, the need for effective information-sharing and cooperation in their supervision is now more important than ever. In this respect, the Eurosystem underscores in particular the importance of strengthening information sharing also between supervisory authorities and central banks without supervisory responsibilities with respect to the major EU banking groups. Next, I am turning to our role as catalyst for market activities fostering financial integration.