important european project from an economic as well as a political perspective. and history has shown that the promised benefits were not mere theoretical concepts but have indeed materialised over the past 12 years. altogether, the euro has definitely been a success – and the financial crisis has not proven otherwise. on the contrary : throughout the crisis, the euro had a stabilising effect and the eurosystem demonstrated its ability to conduct an effective crisis management. nevertheless, it cannot be denied that the crisis revealed a number of structural deficiencies which require further reflection. in my speech, i have outlined the reforms that are necessary to strengthen the institutional foundation of the euro area. nevertheless, it is ultimately in the responsibility of the member states to act in a way that guarantees the stability of the monetary union. here, it is indispensable that all member states acknowledge the economic preconditions that were identified as essential for the functioning of the monetary union and that are embodied in the convergence criteria applied to prospective members. estonia has set an example that it is possible to muster the will to fulfil these criteria even in the midst of a global financial crisis. it is all the more the case that it should be possible to live up to the requirements of the monetary union after having joined – and that applies not only to estonia, but to all its members. thank you for your attention. bis central bankers ’ speeches

. they did, after all, assume that financial markets and the rules on debt would exert enough of a disciplinary influence. but the onset of the sovereign debt crisis put paid to that notion. the no - bail - out clause lacks credibility. even highly indebted member states did not have to pay much in the way of risk premiums in the years leading up to the crisis. and the rules on debt were too tame, not least because germany, together with france, took the sting out of the stability pact early on. the first step towards a functioning maastricht framework is to restore the credibility of the nobail - out rule. it must be possible to reschedule or restructure sovereign debt without crippling the financial system. real progress could be made on this front by automatically extending government bond 7 / 10 bis central bankers'speeches maturities in conjunction with an orderly restructuring regime, and by abolishing the preferential regulatory treatment afforded to government bonds. the idea of automatically extending bond maturities when assistance is requested under the esm rescue programme is to keep private investors on the hook when a member state receives assistance loans. clemens fuest has stressed that this might prevent private creditors from making a quick getaway at the taxpayer ’ s expense if a crisis strikes. 17 a more appropriate regulatory regime for sovereign risk would encourage banks to stop holding as much government debt – particularly paper issued by their home countries – and to set aside more capital to cushion losses. that would make a sovereign debt restructuring episode more manageable for the banking system. furthermore, two measures need to be taken to make the rules on debt more binding. first, it would be helpful for the rules of the stability pact to be simplified. one expert in public finances, friedrich heinemann, has remarked that the official manual illustrating the rules of the pact is more than 200 pages long, and that the various sorts of escape clauses offer a wealth of arguments for justifying high levels of debt. 18 so the proposals to simplify the fiscal rules, as recently tabled by germany ’ s council of experts and its french counterpart, are a welcome sign. what matters at the end of the day is that these kinds of rules are complied with and that they help swiftly reduce the high debt - to - gdp ratios. as for the second measure, a more rigorous interpretation of the rules could be achieved by giving responsibility for fiscal surveillance to an independent authority instead of to the commission. an institution equipped