legislation. second, the proposed mediation and coordination powers should promote further convergence of supervisory action and practices. in this context, i would like to highlight the crucial role of the new supervisory authorities in fostering consistent and effective approaches within the colleges of supervisors. the participation of their representatives in meetings of colleges should favour information exchange within and across supervisors ’ colleges. in addition, the establishment of common supervisory databases should enhance the efficacy of the supervisory colleges ’ action. third, in times of financial distress, the esas can be empowered to adopt decisions fostering a coordinated response by the national supervisory authorities. this can promote effective supervisory action in times of stress. as the financial crisis has shown, swift and smooth coordination among authorities is essential. the esrb let me say a few more words about the esrb. i expect the esrb to make a substantive contribution on two main fronts. first, the esrb will enhance the public sector ’ s ability to detect and assess systemic risk in the european financial system. this should be achieved by monitoring all components of the financial sector that have a systemic impact as well as the interplay between the financial system and the real economy. a sound understanding of the evolution of the linkages – the “ interconnectedness ” – between financial institutions, financial markets and financial infrastructures will be a key element for the successful fulfilment of the esrb ’ s mandate. second, the esrb will fill a gap which – as we know with hindsight – emerged in the run - up to the crisis. this gap consists of the difficulty of translating risk warnings into policy action by the competent authorities. i am confident that the recommendations of the esrb have the potential to foster adequate policy responses. i am aware that there is a wide debate about the scope and addressees of the esrb ’ s recommendations. in my view, the recommendations should primarily focus on the area of financial regulation and supervision and take a macro - prudential perspective. they should not address individual financial institutions. this is the competence of national supervisory authorities. but the esrb could recommend supervisory authorities to use supervisory tools under pillar ii. examples of such tools are loan - to - value ratios, which are measures of liquidity mismatch. work is ongoing in international fora to identify specific macro - prudential tools. the recommendations of the esrb could also identify systemically relevant components of the financial system or key parameters of measures to reduce the potential pro - cyclicality of regulatory requirements

country it was clear what the desired fiscal response should be. the ecb expanded its quantitative and credit easing instruments, as reflected by the strong growth of its balance sheet. this provided space to governments to increase fiscal spending, without triggering severe stress in sovereign bond markets. in fact, the aggregate discretionary fiscal stimulus in the euro area in 2020 has been estimated to be more than 4 % of gdp. by comparison, the global financial crisis prompted a discretionary fiscal stimulus of about 1. 5 % of gdp. i think this response to the covid crisis offers important lessons for the fiscal architecture in the euro area. the successful coordination of fiscal and monetary policy was in great part due to the enormity of the economic threat as well as its symmetric nature. from the outset it was clear that we needed an all - out response from both governments and central banks to shield households and firms from income loss and avoid irreversible damage to the economy. under these circumstances, policymakers decided to activate the general escape clause in the stability and growth pact. the activation of this clause temporarily lifted all restrictions on fiscal policy. this helped prevent undue procyclical fiscal consolidations, such as during the sovereign debt crisis. but shouldn ’ t an effective and concerted monetary and fiscal policy response also be possible under less dramatic circumstances than the covid crisis? and wouldn ’ t we be better off with a framework that allows for more effective macroeconomic stabilization policies without needing to have recourse to an emergency clause that in effect requires the suspension of all fiscal rules? and if the answer to both these questions is yes, how do we ensure that we maintain a balanced macroeconomic policy mix in the emu, during the current recovery phase and beyond? based both on theory and past experience, i think that, in order to make our monetary union more stable, we need a fiscal framework that enhances coordination between member states and allows for a better alignment of monetary and fiscal policy over the entire economic cycle. this requires sufficiently countercyclical fiscal policy also from a euro area wide perspective. not only in bad times or when persistently low interest rates limit the scope for conventional monetary policy. but also in good times, so that governments reduce debt levels to pay for stabilization policies in the future. repair the roof when the sun is shining, an integral element of countercyclical stabilization policy that often gets overlooked. an enhanced ﬁscal framework to ensure stability of the emu as a central