Ladies and gentlemen,
It gives me great pleasure to address you in the heart of Italy's financial marketplace.
Here, better than anywhere else, we can discuss the importance of financial services in the framework of tomorrow's enlarged Union of 25 Member States.
Today I will summarise what this Commission has achieved and the challenges we have ahead of us.
But I also want to say a few words on why I believe Financial Markets are at the intersection between rules and ethics.
First, let me say why an integrated financial market is a goal worth striving for.
The integration of our financial markets is essential for the financial sector. And it is vital for the future of the whole European economy.
The dynamic benefits of a single, deep and liquid capital market will be enormous; 10 trillion euro of private savings invested by European citizens in funds across Europe are an incredible resource for growth.
These funds should be invested in research, technological development, innovation, new infrastructure.
And now enlargement is expanding the frontiers of opportunities in the Union.
European financial institutions have already invested heavily in the newly privatised banking systems of the acceding countries.
The newly emerging capital and insurance markets of the new Member States offer significant growth potential.
The ten new members will have high financing needs during their catch-up phase.
And this will fuel demand for EU capital and financial expertise.
Enlargement is a "win-win" situation.
The onus is on all of us to make the most of this historic opportunity.
To do this we need a speedy, seamless integration of the new Member States into a single financial marketplace.
Ladies and gentlemen,
The European Commission has sought to make this opportunity a reality with the Financial Services Action Plan.
This plan will remove regulatory and other public-policy barriers.
It will grant financial-market participants commercial freedoms on a pan-European basis.
Before the Plan was set in motion, financial integration was the forgotten frontier of Europe's Single Market.
Capital markets were segmented by deep-rooted obstacles to cross-border offer of securities or overlapping and conflicting rules.
Then the introduction of the euro created a paradoxical situation. We had one currency but not one financial marketplace.
The Action Plan is designed to solve this -- to remove borders for financial services as they were removed through Schengen for the circulation of people.
But… no border does not mean no rules.
Borderless finance across Europe does not imply a regulation-free Union. Integration itself calls for comprehensive regulatory harmonisation.
Why? Because the financial system is characterised by pervasive "market failures" and risks, which can be devastating. Without clear rules, the level of both financial intermediation and overall investment will be depressed.
The Action Plan was launched during the financial-market euphoria of the late 1990s. But, even so, it remained clearly focused on the underlying objectives of financial regulation -- financial stability, market integrity and investor protection -- and never lost sight of an underlying "ethical effort".
Robust regulatory safeguards and enlightened supervision have played a critical role in preventing serious institutional failure and financial instability.
The architects of an integrated financial market must never forget the importance of sound regulation and effective supervision as the core European public interest.
At this stage we need to look at our achievements in putting the Action Plan into effect and seeing how far have we come along the road to an integrated financial services market.
In terms of legislative delivery, the figures speak for themselves: 36 out of 42 measures have been agreed.
That sounds good!
But it is one thing to put forward a measure. It is another to see it through the whole process of approval and adoption by Parliament and the Council. And it is still another to ensure it is transposed into national law and -- most of all -- implemented.
So there is still a long way to go if we are to achieve a truly integrated financial-services market by 2005.
I hope the Italian and Irish Presidencies will tie up the loose ends on key proposals such as the Directives on Investment Services and Take-Over Bids.
Specific points in individual proposals have often been the subjects of fierce controversy. But from a broader perspective, the project has laid the legislative foundations for a financial marketplace that is effectively integrated.
A single financial market is no longer a dream -- it is now a realistic prospect.
The unprecedented degree of cooperation between Parliament, the Commission and the Council has been a crucial factor in this success.
Another crucial factor is the quality of the legislation. We held wide consultations. We involved national regulatory and supervisory bodies in the preparation of legislative proposals. And the Committee of European Securities Regulators has done an admirable job in assisting the Commission with measures to implement recent securities legislation.
Many of the key measures have yet to enter into force. But the Action Plan has started a profound restructuring of the Union's financial landscape.
Business anticipation of the emergence of a coherent legal framework, alongside the introduction of the euro, has been a catalyst for change.
We have witnessed the appearance of new markets and new financing techniques.
Venture capital and private equity markets, organised on a cross-border basis, have become important sources of funding for start-ups.
This is driving a reorganisation and consolidation of exchanges and of clearing and settlement infrastructure towards a new trading and post-trading environment.
European retail consumers are experiencing the benefits of increased competition and choice; 33% of the Union's mutual funds are now marketed and distributed on a cross-border basis.
The integration of underlying financial markets has indirectly benefited European households through lower mortgage and borrowing costs.
Ladies and gentlemen, we now need to look at the challenges that lie ahead.
These are not confined to the European Union because financial markets are the globalised industry par excellence.
But at the global level, we are also seeing the emergence of a growing need for trust, transparency, and symmetry of information.
The interdependence of financial markets across the world is clear.
The steep equity-market correction of 2001 starkly illustrates the scope for transmitting uncertainty to the whole international financial system. Financial collateral damage can be very substantial.
European capital markets have suffered more from US financial-reporting scandals than the US capital market itself. However, the United States and we together account for over 80% of the world's capital market. So our top priority must be to concentrate on finding solutions with our partners across the Atlantic.
Clearly, it is in the interest of both the Union and the United States to reconcile our differences, because both sides have much to gain.
The legislative process is not over. A big effort is still needed to ensure that proposals which have gone through Parliament and the Council are transposed into national law, and to make sure they are implemented on the ground.
One area in particular on which the Commission will be focusing will be consistent implementation and even-handed enforcement of the Action Plan rules.
Ladies and gentlemen,
In recent years, within the European Union, the centre of gravity for financial law-making has shifted towards our institutions.
This does not mean that the national regulatory heritage or supervisory structures are about to be abandoned in favour of centralised solutions.
But it does mean we are now irrevocably committed to a collective approach to designing and implementing financial legislation.
This development is an opportunity for Europe to improve its performance. But I am conscious that the transition entails far-reaching changes in the regulatory environment, adjustment costs and risks for market participants and authorities.
The responsibility is on the Commission to develop processes that give the market confidence that its needs and concerns are taken into account.
We will strive to perform our role to the best of our ability.
We look forward to the continued support and commitment of the financial community and national authorities in making a single financial market a reality.
That will be good for all of us -- the financial services sector, their customers and all our citizens across the enlarged Union.
Thank you.
