economic governance and establishing the european stability mechanism, the single supervisory mechanism and the single resolution mechanism. these are important first steps in improving our toolkit for crisis prevention and crisis management, but further progress is needed. in the nearer term, we should move towards completing europe ’ s banking union through a common backstop for the single resolution fund as well as a roadmap towards a european deposit insurance scheme. both are essential for creating a truly single banking system to mirror our single currency. both are also crucial for underpinning the credibility of the banking union and achieving its initial promise of breaking the bank - sovereign nexus, making the financial system more resilient and protecting taxpayers ’ interests. in addition, we must look beyond the banking sector and make progress in developing a capital markets union to enhance further the scope for cross - border private risk - sharing. it is also essential to prevent imbalances from developing into future crises. we need a new convergence process based on the capacity of our economies to withstand shocks and recover from them quickly. this implies not only establishing a more robust financial system ; it also requires stronger governance of structural reforms and tighter control of national fiscal policies. to ensure that member states can adjust to economic shocks, whatever their size, once we achieve greater convergence we will also need to add a layer of fiscal stabilisation at the european level. taken together, these steps towards completing europe ’ s economic and monetary union would help the euro area not only to survive, but also to thrive and prosper. bis central bankers ’ speeches

so we have to be mindful not to exert an undue influence on price formation. another potential complication relates to our public sector purchases. a key safeguard that we have set up for these purchases is to operate so - called “ blackout periods ”, where we do not buy around the date of a new issuance. this facilitates price formation and ensures that article 123 of the treaty – the monetary financing prohibition – is fully respected. conclusion the economic recovery in the euro area has been better than expected and employment has risen strongly. both wages and underlying inflation appear to have turned the corner. all the conditions are in place for a sustained adjustment in inflation towards our aim. so it ’ s just a question of time now. more haste, less speed, however. the improving inflation trajectory means that we can gradually scale back our net purchases and keep monetary policy sufficiently accommodative to continue to support the convergence of inflation towards our aim. we will continue to monitor developments in the economy and set policy in a way that remains consistent with our price stability objective. in doing so, we must also take into account the balance of risks. if we withdraw our monetary policy stimulus too early and too fast, asset prices could collapse and yields rise sharply, with negative spillover effects to the economy. if our asset purchase programme continues for too long, the side effects will increase. and if we nourish a market belief that the exit might be permanently postponed, potential cliff - edge effects could be exacerbated. we are pursuing a credible prospect for the exit to keep these risks contained. see mersch y., “ economic policy and the need for humility ”, speech at the conference “ banking and financial regulation ”, bocconi university, 9 october 2017. 2 bartelsman e., lopez - garcia p. and presidente g., “ cyclical and structural variation in resource reallocation in europe ”, mimeo. 3 see e. g. gopinath g. et al, “ capital allocation and productivity in south europe ”, nber working paper no 21453, 2015 ; borio c. et al, “ labour reallocation and productivity dynamics : financial causes, real consequences ”, bis working paper no 534, 2016 ; andrews d. and petroulakis f., “ breaking the shackles : zombie firms, weak banks and depressed restructuring in europe ”, oecd economics department working paper no 1433, 2017