this enlargement, both in political as well as economic terms, are clear. however, this does not make it less of a challenge, also for the ecb and the national central banks. from mid april onwards, the national central banks of the acceding countries will participate - as an observer - in meeting of escb committees ( in extended composition ) and meetings of the general council. enlargement involves a number of technical efforts from the side of the ecb and the national central bank, in terms of adaptations to the infrastructure, but also creates a new dimension to economic convergence and monetary stability in the european union. i am, however, convinced that the eurosystem will also master this challenge, as it has done before, on occasions, which demanded even more breath - taking efforts. ladies and gentlemen, i should now like to conclude. again, my gratitude goes to his excellency carlo ciampi and governor antonio fazio. i am deeply convinced that this meeting of the governing council will contribute to the team - sprit of the eurosystem and hence will be one more step in the direction of a united europe.

lorenzo bini smaghi : eurozone, european crisis and policy responses speech by mr lorenzo bini smaghi, member of the executive board of the european central bank, at the goldman sachs global macro conference – asia 2011, hong kong, 22 february 2011. * * * i wish to thank huw pill and isabel vansteenkiste for their contributions to this speech. i remain solely responsible for the opinions contained herein. 1. introduction ladies and gentlemen, it is a pleasure to have the opportunity to speak at this distinguished gathering here today. we are certainly living in “ interesting times ”, as the chinese say. slightly “ too interesting, for too long ” i would add. over the past few years, we have all witnessed a global financial crisis, which has caused profound changes in the outlook for the global financial system and global economy. this morning, i will focus on one manifestation of the broader financial turmoil : the sovereign debt crisis experienced by some euro area countries. in my remarks, i will first discuss the origins of this crisis, and then draw some comparisons with the emerging market experience – particularly in asia. after reviewing how the european authorities have responded to the crisis, i will conclude with some remarks on the outlook for the euro area. while we certainly face considerable challenges at present, i am confident that europe will emerge stronger from the current episode, not least because some of the existing gaps in the institutional framework for economic and monetary union ( emu ) will be filled. in the end, this will make the whole structure more stable and robust. 2. origins of the sovereign debt crisis in europe it is striking that those countries which experienced the european sovereign debt crisis in 2010 – notably greece and ireland – were among the best performers in terms of growth in economic activity within the european union ( eu ) over the decade preceding the crisis ( charts 1 and 2 ). indeed, ireland was called the “ celtic tiger ”, drawing a parallel with the fastgrowing “ asian tigers ” in earlier decades. while prima facie a paradox, the relationship between strong pre - crisis growth and the severity of the crisis itself reveals much about the origins of the underlying economic, structural and institutional weaknesses that lie at the heart of recent events. the introduction of the euro in 1999 led to a sharp fall in real interest rates especially in the so - called peripheral countries of the euro area, as nominal interest rates converged to low german levels ( chart 3 ). in addition, the credibility of