but given the long - term harm which the current crisis may inﬂict, they are needed now even more than before. enhancing labour mobility, for example, could make it easier for younger workers and others to move on to more productive jobs and cut their income losses. and such reforms are also an act of european solidarity – by improving resilience they would relieve the community in the next crisis. what is worrying is the large - scale borrowing at the eu level. this kind of borrowing should remain a one - off crisis measure, as permanently raising joint debt does not square with the eu ’ s institutional framework. in his nobel lecture, thomas sargent likened the fundamental situation in europe to the us in the years following the revolutionary war. [ 35 ] under the articles of confederation, ﬁscal sovereignty lay largely in the hands of the states. but during the war the young republic had accrued large amounts of common debt and later struggled to bear its burden. after a long and heated debate, americans ultimately agreed on a ﬁscal union, embedded in a political union with strong democratic institutions and enshrined in a new constitution. what can this teach us about the situation in europe today? my view on this is that shifting ﬁnancial liability to the community level requires transferring ﬁscal policy powers to that level, too. much closer political integration would be needed and, eventually, the eu would have to evolve into a democratic federal state. that said, there is also an alternative way to balance action and liability in the monetary union : strengthening the ﬁscal responsibility of member states and ensuring that their public ﬁnances are solid. however, it ’ s up to the citizens of europe, and not to their central bankers, to choose between the two paths. 5 conclusion https : / / www. bundesbank. de / en / press / speeches / deglobalisation - disrupted - education - and - debt - economic - policy - challenges - following - the - pandemic - 84 … 8 / 11 19 / 10 / 2020 deglobalisation, disrupted education and debt : economic policy challenges following the pandemic | deutsche bundesbank ladies and gentlemen the pandemic has inﬂicted particular harm on younger people. the labour market adjustment has hit them disproportionately and could compromise their careers. school closures have disrupted the attainment of skills and might lower lifetime incomes. moreover, less open and less competitive markets

. whatever political decision is taken, supervisors will not only do all they can to make the transition to a new regime as smooth as possible ; they will also, in the long run, try to reduce unnecessary inefficiencies where possible. that way, we can hopefully keep the efficiency losses to the economy at a rather negligible level. yet, one thing must be absolutely clear : relaxing regulatory standards as an instrument of economic policy is not an option. competitive deregulation through tax or supervisory policy would erode the foundation of our future cooperation. 7. conclusion ladies and gentlemen i was born in the united states, grew up in germany, and spent much of my life working around the world, including london. personally, the backlash against the integration of our global community has shattered my core beliefs and worries me deeply. but i accept that global economic integration has gone too far. theoretically, it may be appealing to have one global market, but the reality is that it does not work. it has substantial negative repercussions – repercussions that our current approach to globalisation cannot handle well. we need to find a new, third way ; a middle way that harnesses globalisation ’ s benefits and limits its negative repercussions. to stop a race to the bottom, national governments and parliaments will have to be more willing to go their own way rather than believing in entirely free, frictionless global markets and fully harmonised rules. 6 / 7 bis central bankers'speeches they will have to decide what level of compensation they want to provide to those who lose out from globalisation ; and each society will have to reconsider where it makes sense to impose limits on global markets and internationally active firms. however, there would still be substantial room for the harmonisation of rules, but it should be less, and focused, harmonisation with minimum standards only in carefully selected, meaningful areas. i personally will do everything i can to contribute to finding the right approach. ten years from now, i hope we will have adapted the multilateral system to form one that does not condemn distinct national rules as something illegitimate or inefficient, but one that combines sensible global integration with institutional diversity. only if we become that open - minded and accept the rich diversity of human culture will we be able to sustain a close multilateral system that is geopolitically stable and enjoys the support of the clear majority of people. we need to debate this earnestly and