As regards monetary policy, the Eurosystem has implemented a set of measures that ensure the provision of liquidity to the euro area financial system, including to the banks of those peripheral countries that are currently subject to the greatest market scrutiny. With respect to fiscal and macroeconomic imbalances, euro area governments are now strengthening the rules for fiscal and broader economic policy coordination. They have created and are refining facilities that can provide external financial support to those Member States facing the most intense pressures in sovereign debt markets. These developments aim to correct the deficiencies in the institutional architecture of Economic and Monetary Union exposed by the financial crisis. These facilities need to have sufficient resources as well as the flexibility to contain market pressures and coordinate the public and private sectors so as to achieve a sustainable and mutually beneficial outcome in an environment where several equilibria may be possible. The Asian experience in the mid- to late-1990s demonstrates that radical reform can lead to a sustained recovery – one achieved largely without restructuring public debts. Indeed, one can argue that Asia has emerged from its financial crisis stronger than before: the institutional weaknesses which contributed to the build-up of financial fragilities, but were masked by high growth rates during the pre-crisis boom have been addressed. Similarly, Europe will emerge from its current travails stronger if the weaknesses revealed by the recent financial crisis are properly identified and corrected through institutional innovation and reform. I am confident that this will be the case.

This is an area where the Eurosystem and the European Commission have taken significant measures, but integration continues to be affected by legal, fiscal and technical issues. An important set of issues on which the panellist may want to comment relate to the regulatory reform process, where the G20 provides the strategic impetus, the Financial Stability Board (FSB) plays an important role in policy coordination, and the Committees and working groups (such as the Basel Committee on Banking Supervision, which is the emblematic Global Committee) the review of specific international standards. Important regulatory reforms are underway in Europe, as well as in the United States, and I want to elaborate on them because they have important implications for the ECB. As you know, the proposed reform for the financial supervisory framework in the EU will be based on two pillars. The micro-prudential pillar, the European System of Financial Supervisors (ESFS), will be composed of the national supervisors and three European Supervisory Authorities (ESAs). The European Systemic Risk Board (ESRB) will form the macro-prudential pillar. Under the proposals of the European Commission, the ESAs will carry out a range of activities, including the issuance of binding and non-binding rules which will provide the basis of a so-called “single EU rulebook”. The ESAs will further promote a consistent application of EU legislation and of a common supervisory culture, and provide for mediation in the case of disagreements between national supervisors.