invent one. and it ’ s not a good idea to stretch the flexibility, which is there, of the stability and growth pact too much, otherwise it will lose credibility. on structural reforms, all countries can act, and all countries can improve the composition of the budget by cutting taxes and unproductive expenditure. the legacy of the crisis includes the heavy burden of npls on banks, including in italy, where some measures have been taken recently. i do not work on the supervisory side of the ecb, but npls matter for monetary policy if they hamper its transmission and are one of the factors that weigh on euro area growth, and not just in italy. in the italian case, the launch of the atlante fund is an initiative to recreate confidence and goes in the right direction. it shows the willingness of all the parties involved to address the issue in a swift and timely manner. but beyond that, npls need to be addressed at the root, not only in the balance sheets of banks, but by improving the health of the borrowers. we need, for instance, to tackle the fact that smes don ’ t have enough equity, or that collateral is too difficult to repossess. insolvency laws need to be improved, and that is not specific to italy. the sooner governments act on insolvency procedures and collateral frameworks, the better. in general, the crisis has taught us that recovery in the euro area has been delayed, in comparison with the us, because we were slow in addressing the problems of the banks and there was too much supervisory forbearance. that is why the single supervisory mechanism ( ssm ) was created and that is why i think supervisors should err on the side of caution. bis central bankers ’ speeches central bankers do not like to talk about currency wars and the ecb always says that the exchange rate is not a target. however, with the dollar and emerging markets ’ currencies weakening, is the euro “ losing the war ” and therefore making it more difficult for the ecb to reach its target? the euro has stabilised over the last month after a clear depreciation. it is not an obstacle to our monetary policy. only if there was a sharp appreciation of the euro would that be a concern. did tensions over the exchange rate resurface at the g20 in washington? and was there a plaza - style accord in shanghai? all stakeholders, not only the

benoit cœure : interview in il sole 24 ore interview with mr benoit cœure, member of the executive board of the european central bank, in il sole 24 ore, conducted by mr alessandro merli on 25 april and published on 27 april 2016. * * * last friday in amsterdam the economic and financial affairs council ( ecofin ) discussed a dutch presidency proposal to change the rules on sovereign debt holdings in banks ’ portfolios. that was opposed by a majority of countries. what happens now? there were clearly different views among ministers and they agreed that the issue needs to be investigated further. it ’ s a long technical process. several participants, including the ecb, made the point that we should seek to achieve global consistency. we should have as level a playing field as possible in banking regulation. to be honest, i was never totally convinced by the argument that there cannot be a european discussion on sovereign risk : the bank / sovereign nexus exists everywhere, but in the euro area it ’ s unique in its intensity and there is an acceptance that it has been a major contributor to the euro area crisis. but any european answer has to be set against a global background. we need to wait and see how the discussion develops in the basel committee. that was very much the tone in amsterdam. the germans, and a few others, make the point that there cannot be a european deposit insurance scheme ( edis ), which the ecb says is an essential part of the banking union, without a solution to banks ’ sovereign exposure. so, if edis is put on hold, does that mean there will be a long delay before a common deposit insurance is introduced? the exclusive link between the two is a political construction. there are at least three dimensions to the issue of sovereign risk. one has to do with the risk in banks : that is clearly tied to edis. progress in risk sharing has to be combined with progress in risk reduction. it makes sense in economic terms and it makes sense in political terms. but if we want to examine all the consequences of putting risk weights on sovereign bonds or setting a limit on exposure, they are not just about risk in banks. they also have an impact on how governments fund themselves. in europe, unlike the us, most government bonds are purchased by banks. so any change in sovereign exposure for banks would also have consequences for government funding. this second dimension ties in with the discussion on fiscal union. there is also a third question : the need