those objectives. bis central bankers ’ speeches second, the system of multilateral surveillance did not prevent pronounced macroeconomic imbalances : productivity differentials, current account deficits, excessive private sector borrowing. in 2009, the deficit on the current account of the balance of payments amounted to 10 per cent in greece and 7. 5 per cent in portugal. in ireland, portugal and spain, the financial debt of households and firms amounted to between one and a half and two times the euro - area average of 170 per cent of gdp ( in italy it was equal to 130 per cent ). in ireland, the largest national banks had balance - sheet assets totalling more than five times gdp ; the collapse of property prices and the recession caused them huge losses. imbalances of this kind ultimately have repercussions on the public finances, even in countries where these are initially in order. in the irish case, the public resources spent on supporting the banks came to more than 20 per cent of gdp. last autumn the european commission and the working group led by european council president herman van rompuy put forward proposals concerning both aspects : how to make the stability and growth pact more cogent ; how to extend surveillance to macroeconomic developments. it was proposed that the pact be strengthened for the prevention of fiscal imbalances, by intensifying monitoring and introducing timely monetary sanctions, and for their adjustment, by providing in particular for the possibility of initiating the excessive - deficit procedure not only when the deficit exceeds 3 per cent of gdp but also when the reduction in the debt towards the 60 per cent ceiling is deemed unsatisfactory. in the macroeconomic field, a system of monitoring imbalances having potentially significant implications for the euro area ’ s financial stability was envisaged, with quantitative indicators and critical thresholds based on which the european council may issue recommendations to the country concerned and, in the most serious cases, apply financial sanctions. lastly, it was recommended that the efsf be replaced from 2013 onwards by a permanent mechanism of financial support, the european stability mechanism ( esm ). only the countries considered to be solvent would have access to financing, which would be conditional in any case on their adopting serious adjustment plans ; the others would be asked to negotiate a debt restructuring plan with private creditors by which to return to a situation of solvency. on 15 march the eu finance ministers agreed a “ general approach ” that fully implements the recommendations of the commission and of the van rompuy

mario draghi : the euro – from the past to the future address by mr mario draghi, governor of the bank of italy and chairman of the financial stability board, at the catholic university of the sacred heart ( universita cattolica del sacro cuore ), milan, 21 march 2011. * * * the euro : an idea that goes back a long way the idea of a single currency, in place of a congeries of local or national monies, did not gain much ground in modern europe until the second half of the nineteenth century. why was that? it would be natural to think that a universal currency is a timeless aspiration : to extend the traditional functions and therefore the advantages of money in the widest geographical sphere. a possible explanation is the redistributive use that money had been put to over the centuries : in classical antiquity and then in the middle ages, adjusting the currency – increasing or reducing the gold or silver content of metal coins – was often a way for the prince to appropriate resources ; striking coins was an attribute of sovereignty. it took a long time to reach the point, in the nineteenth century, when the value of a monetary unit was defined solely by the quantity of precious metal it contained ; paper money was declared convertible into metal ; money had been “ depoliticized ”. thinking up monetary unions then became a possible exercise, as long as the candidates had the same standard : gold, silver or bimetallic ; it was sufficient to agree on the fineness, the weight and the denomination of the coins to be put into circulation. a union of this kind, the latin monetary union, inaugurated in 1865, brought together italy, france, switzerland, belgium and greece, but it had a difficult life and broke up, as a practical matter, at the beginning of the next century. the monetary unions realized within federal states – the swiss and the german ones – fared better. but the use of the currency for redistributing wealth did not come to an end. despite the establishment and consolidation of technical institutions – the central banks – delegated to manage the issuance and circulation of money, the currency reverted, at least in wartime, to being an instrument of state financing. the transition to paper money facilitated this process. during the first world war, the governor of the bank of italy, bonaldo stringher, noted that the bank of italy “ has given a stimulus to banknote production equal to that