justice, provides the strongest possible reassurance that openness does not promote rent - seeking and does not harm consumers. our response to “ america first ” can therefore only be “ europe united ”, as the german foreign minister heiko maas recently put it. [ 8 ] in other words, we should foster cooperation on security and defence, speak with one voice on international affairs, and complete both the single market and the euro area ’ s architecture. let me stress the importance of the last objective : completing the euro area ’ s architecture. the european central bank has a fundamental stake in this project, given its mandate to protect the stability of the euro. but completing the euro area ’ s architecture is also necessary for europe to be able to attain its other objectives. we won ’ t be able to foster cooperation on security and defence, or to speak with one voice on international affairs, or to complete the single market if we repeatedly have to tackle economic crises which are largely of our own making. a series of crises has already taken its toll on welfare and jobs, and they have sown the seeds of division in a way that is still holding us back at a time when we need decisive action. a sound and sustainable euro area institutional architecture will help redirect political capital where it is most needed. so, these and other shortcomings need to be overcome, not only to strengthen the workings of the eu but also to protect and defend our interests abroad. if we europeans fail to make further progress, or if europe remains divided between north and south and between east and west, then we will be playing into the hands of those who are trying to divide us and marginalise our actions. thank you. 2 / 3 bis central bankers'speeches 1 see lebow, r. n. and r. kelly ( 2001 ), “ thucydides and hegemony : athens and the united states ”, review of international studies, vol. 27, no 4, pp. 593 – 609. 2 many people in the rest of the world may have seen it differently, of course. 3 see europa. eu / european - union / about - eu / eu - in - brief _ en. 4 see pisani - ferry, j. ( 2018 ), “ what leadership for tomorrow? ”, introductory note, les rencontres economiques d ’ aix - en - provence, 8 july. 5 see cœure, b. ( 2018 ),

the only way for asset prices was upward. abundant liquidity and financial complexity provided respectively the driving force and the landscape underlying both the process of financial leveraging and its eventual unwinding. the weaknesses unearthed include, as a third and essential element, financial players ’ incentive structures. strictly speaking the purpose of the financial system is to write, manage and trade claims on future cash flows for the rest of the economy, a purpose that increasingly fell victim to a game for fees, short - term profits, and arbitraging regulation. indeed, most remarkably ex - post, the “ shadow banking sector ” did not have to set aside capital against the risk of things going wrong, as eventually they did when euphoria turned into sobriety. the mechanics of the unwinding process are by now also well understood. following one substantial shock to a single market segment ( the us sub - prime related credit ), the process of adjusting risk positions in the financial sector was hindered by a – in some cases complete – breakdown in the price discovery process across instruments owing to the lack of understanding of the distribution and magnitude of risks underlying the various financial instruments. in turn, the unprecedented system - wide dry - up of liquidity driven by reductions in position - taking by major financial intermediaries fed back into the overall uncertainty, thus escalating measured risk and frustrating the very same efforts towards risk reduction. indeed, the magnifying glass turned against those with business models most heavily relying on it, who found themselves confounded by the sheer magnitude and speed of the confidence implosion. that this set of institutions extends well beyond the banking sector, is yet another reminder of the magnitude of the challenge that lies ahead. the response of the central banking community to the liquidity problems the eurosystem makes a clear distinction between setting the monetary policy stance to maintain price stability and its liquidity decisions taken in the course of implementing this stance. this distinction serves to isolate signals of the monetary policy stance from the noise introduced by liquidity movements and volatility in very short term rates. since the onset of financial tensions in august 2007, the actions of the ecb have remained in line with this principle. in both “ normal ” and “ turbulent ” times, the primary aim of the eurosystem ’ s open market operations is to keep the overnight rate as close as possible to the minimum bid rate. during the recent period of turbulences some institutions, even if solvent, had difficulties in accessing