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Source: Bank for International Settlements

Let me start by thanking you all for being here today.

If you travel by train from the city of Bordeaux southward to Spain, at the border you will have aslightly strange experience. Since the rail gauges in France and Spain are of a different width, the rail

bogies, that’s basically the wheels of the train, have to be replaced. A very heavy machine lifts the  train up, the bogies are rolled away and replaced by others. It takes about one hour before the

traveler can resume his or her journey.

This rather remarkable example of systems that do not fit together, and that reminds one of the nineteenth century, is not uncommon in European capital markets. This becomes clear if you compare

it with the United States. Consider a US investor located in Iowa who wants to invest in a firm located in Florida. Information on the firms finances can be readily accessed via the Securities and Exchange Commission, while securities and insolvency law are of course similar across states. Now consider the same process for a Belgian investor aiming to invest in Portugal. Firm information is scattered across business registries, while the investor has to accustom itself to various local rules. This goes from small discrepancies, such as rules on shareholder disclosure, to large differences, such as insolvency laws.

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