##ity monitoring through a monthly liquidity coverage ratio and a yearly net stable funding ratio will be complemented by macro prudential surveillance in a european system risk board closely associated with the general council of the european central bank. the us equivalent to this systemic risk board recently held its inaugural meeting. three european agencies for banking, securities markets and insurance start with a mostly coordination function, but have certain evolutionist competence clauses in their statutes. they have to walk the narrow line between cross border activities of banks and integration of markets on the one hand and competences remaining at national levels like deposit guarantee schemes, resolution procedures, and insolvency legislation, i. e. everything that pertains to the tax payer who remains fiercely protected by national governments despite the spill - over effects of cross border activities, on the other hand. to tackle these effects through a potential 351 bilateral treaties in so many areas among 27 member states, can hardly be seen as a stable equilibrium in decision making nor a level playing field for economic activities in a single area. the new institutional set - ups at eu level therefore face some of the same problems we experience within the euro - area. the ultimate goal will however be the same : foster economic welfare through integration of markets and market players. fiscal challenges learning from recent experience, we have to examine carefully the role of excessive debt. after collapse of lehman brothers in september 2008 the accumulation of private debt was suddenly stopped, but the problem of excessive indebtedness was not solved. fiscal rescue packages, the impact of automatic stabilizers, and the necessary support of the financial system led to a significant increase in public leverage to levels unprecedented in peacetime. government debt in the euro area will have grown by more than 20 percentage points from 2007 to 2011. the equivalent figures for the us and japan are between 35 and 45 percentage points. debt - to - gdp - ratios are approaching 90 % in europe, 100 % in the us and the uk, and 200 % in japan. the debt burden must be eroded and new excesses in indebtedness have to be prevented. this holds particular for the euro zone because a single monetary policy needs to be supported by sound public finances. fiscal and macroeconomic surveillance need to be empowered. the recent discussions within the european council show a lack of ambition compared to the already timid proposals of the commission ; although the designed new fiscal framework might speed up a faster and broader - based imposition of sanctions on countries that do not comply with

edge of the abyss. political responses the financial crisis and the subsequent economic downturn have called for unprecedented policy responses by both fiscal and monetary authorities worldwide. see de la dehesa, guillermo ( 2010 ) : twelve market and government failures leading to 2008 – 09 financial crisis, occasional paper no 80, group of thirty, washington dc. differences in the economic and financial structures and the political set up of the euro area compared to the united states led to different specific measures – aiming at achieving the same goals, however. let me elaborate on these structural differences : – first, the economic structures of the euro area and the united states differ a lot. small and medium - sized enterprises, for example, play a dominant role in the european economy. moreover, the public sector represents bigger parts of the european economy, and is a major player in the ownership structure of certain banks. overall, the economy in the euro zone is less flexible than in the us. wages and prices are slower to adjust. let me provide an example from my “ home turf ”. prices change rather infrequently in the euro area. on average it takes retailers 13 months to reprice their products. according to surveys, it is 11 months for producers. in the united states, comparable figures indicate durations of less than 7 months and slightly more than 8 months respectively. whereas this lower flexibility might be a disadvantage to benefit from positive supply side shocks like technical innovations, during the time of a crisis this european “ sluggishness ” offered some protection against an overshooting of negative expectations leading to a deflationary spiral. – second, there are also profound differences in their financial structures. the differences in the composition of funding sources for non - financial corporations are striking. europe ’ s small and medium - sized firms have no direct access to capital markets but need loans to finance their activities. in the euro area bank financing accounts for roughly 70 % of firm ’ s total external financing. in the united states, by contrast, firms rely to a much larger extent on market - based sources, which represent 80 % of total external financing. also, universal banking is the predominant business model in continental european banking compared to the us which – before the outbreak of the crisis – were characterized by specialised investment banks. in its fight against the crisis the ecb always has taken account of this particular structure of the euro area economy. to be effective, the applied measures of the ecb concentrated on the banking sector and the provision of