that identifies the risks and issues the recommendations and those that control the policy instruments bearing on financial institutions and markets could give rise to confusion in the assignment of responsibilities and to misalignment of incentives. on the one hand, the esrb ’ s recommendations should be formulated at eu - wide level or possibly refer to specific categories of intermediary or groups of countries but not to individual institutions, in order to avoid confusion of competences with the national authorities that supervise those institutions. on the other hand, the mechanisms for the enforcement of the recommendations must be particularly stringent. the communication of the commission envisages that if the national authorities decide not to follow a recommendation or to follow it only in part, they must give a public explanation for their reasons ( “ act or explain ” ). this also implies that the recommendations of the esrb should normally be given adequate publicity. the direct assignment of some instruments to the esrb could also be considered. for example, in the international discussion there is agreement on the need to introduce countercyclical prudential instruments that encourage the formation during expansions of buffers to be used in recessions or market crises, when the risks materialize. the esrb could have a direct role in the design and maintenance of these instruments. 3. 2 independence, governance and accountability ( i ) independence of the esrb and involvement of the political authorities. anchoring the esrb to the ecb should provide sufficient guarantees of the institutional independence of the macro - prudential supervisory function. indeed, it has been argued that this independence might be excessive, given the responsibilities that governments also have regarding financial stability. however, the institutional arrangement proposed by the commission strikes an appropriate balance between the different interests. the involvement of the political authorities is ensured through the participation of the chairman of the eu economic and financial committee in the esrb as an observer. in addition, the fact that the esrb submits its recommendations to the ecofin council will ensure the governmental involvement and commitment essential to their implementation. ( ii ) independence of the esfs. by comparison, the safeguards for the independence of the esfs appear less sturdy. the de larosiere report, the communication of the commission and the conclusions of the council underscore that its independence is essential to the success of the reform, but the legal basis for the new authorities will consist solely in article 95 of the treaty, which according to the practice followed to date assigns the commission strong influence over the

weaknesses in the programme countries. eu finance ministers committed in december 2011 to providing additional resources for the imf as part of a broader international effort. in this context and assuming that there is appropriate parliamentary support, the deutsche bundesbank, which manages the german contributions to the imf, has pledged a new bilateral credit line of 41. 5 billion euros to go to the imf ’ s general resources account. hence, these resources will be available to all imf members. in order not to violate the legal framework of emu, the resources provided to the fund must have all the characteristics of a reserve instrument. in particular, the imf must not become a vehicle for monetary financing of government deficits. another issue that has been discussed in the context of ring - fencing is a stronger role for the eurosystem in crisis management. however, this demand ignores the fact that the eurosystem has already greatly contributed to containing the crisis via its various unconventional monetary measures. this has already stretched central banks ’ mandate significantly, and going even further would undermine the credibility of monetary policy. i do not need to tell you that jeopardising the credibility of monetary policy will do absolutely nothing to preserve the stability of the euro. this leads to a more general point. the crisis cannot be resolved solely by throwing money at it. while money can buy us time to tackle the crisis, it is imperative that we use that time in order to address its root causes. this approach is, by the way, fully in line with one of the priorities defined by the mexican g20 presidency : “ economic stabilization and structural reforms as foundations for growth and employment ”. regarding the situation in the euro area, three things have to be done. first, the member states have to restore confidence through fiscal consolidation. this is unavoidable and, given the dire state of public finances, less contractionary than is often assumed. conversely, criticising the german authorities for not using their alleged “ fiscal space ” is quite inappropriate. since the spill - over effects of german fiscal policy on the peripheral countries of the euro area are quite limited, the benefits would be much smaller than the harm of compromising the consolidation course. second, some member states have to boost their competitiveness and their potential for growth through structural reforms. in this regard, we have seen some promising signs during recent weeks. third, we need rules ensuring stricter fiscal discipline in the future. some progress has been made with recent amendments to the sg