With supranational monetary policy concerned primarily with the overall price stability objective, symmetric (global) shocks transmitted through financial linkages and domestic (national) divergent cycles, the burden of adjustment has to be borne by national macroprudential policy. The absence of other adjustments mechanisms, such as a perfect labour mobility or a transfer mechanism in the form of unemployment insurance 17, adds to the burden on fiscal policy, which is already suffering from moral hazard issues. The Vice-President of the ECB, Vitor Constancio, is right to emphasize that “macroprudential policy is therefore essential in any economy as the business and financial cycles are not synchronised. Even more so in a monetary union where vulnerabilities identified in each country can be addressed with macroprudential policy, allowing for the appropriate heterogeneity, while countries remain subject to a single monetary policy” 18. 13  Ray, H. (2013): Dilemma Not Trilemma: The Global Financial Cycle And Monetary Policy Independence, Working Paper 21162, NBER Working Paper Series. 14  Couré, B. (2015): Paradigm lost: Rethinking international adjustments, speech atEgon and Joan von Kashnitz Lecture, Clausen Center for International Business and Policy, Berkeley, 21 November 2015. 15  Beck, H., Prinz, A. (2012): The trilemma of a Monetary Union: Another Impossible Trinity, Leibniz Information Centre for Economics. 16  Pisani-Ferry, J. (2012): The Euro Crisis and the New Impossible Trinity. 17  Bernoth, K., Engler, P. (2013): A Transfer Mechanism as a Stabilization Tool in the EMU, DIW Economic Bulletin, 1.2013. 18  Constâncio, V. ibid.

Seeing rebalancing as being all about cutting costs is misguided as benefits diminish with more countries engaging in such activities. However, pursuing structural reforms to raise productivity, in contrast to wage moderation, benefits substantially and uniformly all countries. “We do not need all euro area countries to adopt identical structural reforms. What we need is a framework that takes into account both how  19  Constâncio, V. ibid. 20  Baker, A. (2013): The bankers’ Paradox: The Political Economy of Macroprudential Regulation, School of Politics, International Studies and Philosophy, Queen’s University of Belfast. 21  Draghi, M. (2016): How domestic economic strength can prevail over global weakness, keynote speech at the Deutsche Börse Group New Year’s reception 2016, Eschborn, 25 January 2016. 22  European Commission (2015): Completing Europe’s Economic and Monetary Union, Report by: Jean-Claude Juncker in close cooperation with Donald Tusk, Jeroen Dijsselbloem, Mario Draghi and Martin Schulz. 23  Coeuré, B. (2016): Rebalancing in the euro area: are we nearly there yet?, speech at the Danish Economic Society, Kolding, 15 January 2016, (https://www.ecb.europa.eu/press/key/date/2016/html/sp160115.en.html). 6  BIS central bankers’ speeches  countries differ based on their national conditions, and how they are similar by virtue of being in a monetary union. Within those parameters there are various combinations of countryspecific institutions that can produce smooth adjustment.” (Praet, 2015) 24. These notions should, of course, be the key ingredients of the Macroeconomic Imbalance Procedure and the Structural Reform Support Programme (as of 2017).