Now let me come to the risks that a generalised move towards universal banking could entail, and the ways and means of containing them. The main risk, of course, is the emergence of conflicts of interest. One such potential conflict of interest may arise within any bank, between the bank’s own risk-taking activity and risk-taking for its customers. The classic example of this is the potential conflict of interest between credit-granting and securities underwriting, but this is only one example. The traditional way of avoiding the misuse of such conflict-creating situations is (a) to devise an organisational structure with clearly distinguishable lines of responsibility, (b) to avoid flows of “inside” information between the various activities, (c) to attribute to each activity costs, income and profits, and (d) to entrust external auditors with the surveillance of the systems put in place. The end-result will, of course, never be entirely safe. Moreover, the building of “Chinese walls” inside a multi-polar banking organisation may weaken, or even destroy, the synergy between those poles, i.e. it may undermine the rationale of a multi-polar organisation. I would not want, however, to overstate the internal conflict of interest argument. In the long run, the kind of conflict to which I have referred is unlikely to be very strong. In a longer-term perspective, no bank can afford to favour its own risk-taking activity at the expense of its customers - especially if auditing makes it certain that any misuse of the bank’s powers would come to light. 3.

Against the background of the current economic developments, it offers the necessary flexibility. Shortfalls in tax revenues and additional expenditure arising automatically from the economic situation support the economy. Where there is room for manoeuvre, additional fiscal policy measures can be effective. They should be timely, targeted and temporary, and take account of the respective country-specific situation with regard to state finances. Notwithstanding all budgetary measures for supporting the economy in the short term, we need to ensure the sustainability of fiscal policy in the medium to long term. Public confidence in the soundness of state finances must not be undermined as this would also impair the effectiveness of the economic policy measures. Therefore, “exit strategies” from the current fiscal stimuli should be already thought of. Structural reforms Structural reforms in the countries of the euro area are very important for two reasons in particular. They are necessary in order to enhance the flexibility and resilience of the euro area economy and to increase its growth potential. Such structural reforms relate to the markets for goods and services, and the labour market. Reforms of the goods and service markets should strengthen competition and accelerate an effective restructuring. An example of successful reform is the telecommunications sector, where liberalisation has enhanced competition, increased the variety of products and lowered prices, to the benefit of consumers. Labour market reforms should have two goals: to promote appropriate wage-setting and to facilitate labour mobility – the mobility between sectors of the economy and between regions.