by the credibility of the eurosystem and the progress made in the reform of european governance. fears of euro reversibility are linked in the first place to those concerning the sustainability of public debts and the competitiveness of member countries. for this reason the activation of omts and their continuation are subject to specific undertakings regarding public finances and structural reforms as part of assistance programmes. the financing of the programmes with esm resources is an incentive to further strengthen the governance of the union, which is essential to achieve a permanent reduction in the european component of the differentials. monetary policy can guarantee stability only if the euro - area ’ s economic fundamentals and institutional architecture are consistent with it. every country must do its part. the announcement of omts produced immediate benefits : medium and long - term yields in the countries under pressure decreased and the fragmentation of markets along national borders was attenuated. albeit with fluctuations linked to the remaining, pronounced uncertainty about the determination of all the member states to proceed with the strengthening of the union, the yield spreads between euro - area government securities remained on a downward trend. that between ten - year btps and bunds is about 250 basis points today. on 19 july a group of economists of various nationalities and affiliations published a manifesto in support of outright monetary transactions ( a call for support for the european central bank ’ s omt programme ), arguing that “ the success of the omt announcement proves that the omt is primarily a monetary policy instrument … it is the responsibility of a bis central bankers ’ speeches central bank and a defining feature of a lender of last resort to assume liquidity risk, including through the purchase of financial assets when necessary ( a step that has also been used by the bundesbank itself in the past ). ” there are different standpoints ; it is understandable that some should question the compatibility of outright monetary transactions with the constitutions of some euro - area countries, but the doubts about the possibility of making effective use of esm resources must be dispelled quickly in order to preserve the progress made, safeguard the rights and not thwart the efforts of those who have helped to develop the instruments of financial support. the omt announcement prevented a financial collapse with potentially devastating consequences for the european economy : all the member countries benefited, not just those at the centre of the sovereign debt crisis. more than anything else, however, a shared determination to advance towards a full european union is essential. the ecb and the national

##ing discussion on the budgetary union and plans for a political one. the agreements reached in the last two years in the matter of public finances have reinforced the commitments entered into previously but they have not established more demanding targets. the new european governance has increased the automatism of coherence checks on policies and objectives and of potential sanctions ; countries have been asked to recognize the european rules in their national legislation. even the “ debt rule ”, which calls on countries to reduce by 1 / 20th annually the amount by which their debt exceeds the threshold of 60 per cent of gdp, in fact renders operational a requirement already embodied in the treaty of maastricht. for italy, compliance would not entail the adoption of a permanently restrictive budget policy stance, but it does imply the return to a stable growth path and it requires a faster pace of adjustment to the geopolitical, technological and demographic changes of the past thirty years. the new macroeconomic imbalance surveillance procedure is an early warning mechanism based on a scoreboard of indicators and alert thresholds. the indicators are analyzed by the european commission in an annual report identifying the countries to be subjected to indepth review. in the case of particularly severe imbalances, the commission draws up, for approval by the european council, a set of specific recommendations calling for adjustment measures ; failure to comply may lead to sanctions. until two years ago europe had no tools with which to manage a sovereign crisis. the first measures to support greece, and to a smaller extent ireland, involved the use of bilateral loans. in may 2010 the european financial stability facility ( efsf ) was instituted – a temporary mechanism that was also adopted for portugal and has remained in operation until this year ; the bonds issued under the facility are guaranteed by the member states. in july 2011 the efsf was flanked by the european stability mechanism ( esm ), a permanent crisis management tool instituted by international treaty and endowed with capital of its own ; esm loans to spain were used to bolster the country ’ s banking system. the total lending capacity of these two instruments, initially set at €250 billion, has been raised progressively to €700 billion. when the efsf was launched the only method of intervention available was to grant loans under support plans for the countries in difficulty ; this has gradually been extended and now includes, with appropriate conditionality, interventions on the primary and secondary markets for government securities, opening of precautionary credit lines,