as it facilitates direct recapitalisation. but it also has positive effects in its own right. given appropriate powers, a single supervisor would produce greater transparency in national banking sectors and reduce regulatory capture, thereby increasing investor confidence. in addition, it would support financial integration by “ europeanising ” supervisory priorities. for example, some supervisory actions we have seen during the crisis that have caused the single market to fragment, like requiring banks to match domestic assets and liabilities, would no longer be anticipated. in terms of design, this supervisory mechanism should have a clear euro area dimension, while remaining fully compatible with the single market and eu - wide supervisory harmonisation. the ecb stands ready to play a role, provided that there is no contamination between monetary policy and financial stability. of course, extending the remit of the ecb should come with higher standards of democratic accountability. third, the decisions to waive seniority and make full use of the efsf and esm instruments send an important signal to markets. that signal is : policymakers have understood the complexity of the crisis and are prepared to exploit the flexibility of the rescue funds to address it. this is also evident in the decision by the euro summit to allow efsf / esm assistance for countries respecting their fiscal and structural reform programmes, reducing the stigma of requesting support. the ecb will play its part too by acting as agent for the efsf and esm to facilitate effective market operations. overall, it is difficult to uphold the caricature that europe does not have the tools to handle the crisis. if anyone had known, in 2010, that within two years there would be a firewall of 700 billion euro usable for loans to sovereigns, bond purchases and bank recapitalisation, the euro area would have been called ahead - of - the - curve. now that this exists, it is criticised for being insufficient. this is simply the nature of evolving expectations. but it should not distract us from the steps that have been taken. they are impressive both in historical comparison and in their own right. 2. fiscal consolidation and growth the second current criticism of the euro area is that its focus on fiscal consolidation is destroying growth prospects. the argument goes that in a weak economy experiencing bis central bankers ’ speeches private sector deleveraging, an active public sector is essential to maintain demand. budget cuts will only lead to lower growth, higher unemployment and larger deficits. i see no contradiction between fiscal consolidation and sustainable growth

major challenges in restructuring markets and industries, enhancing fiscal sustainability, and fostering technological advancement and the enlargement of the euro area. speaking of enlargement, which will be the topic of the following session, i would like to stress the great opportunity it offers for the european economy as a whole. fears and doubts have been expressed. i recall that the same fears and doubts were expressed back in 1986, at the time when spain and portugal joined the european union. today, nobody would dispute the positive impact their accession had on the european economy. beyond the enlargement of the european union will come the enlargement of the euro area. joining the euro area is a very important step, as it is an irreversible decision. this requires careful preparation. every country will be assessed on its own merits and its own particular situation, on the basis of a strict analysis of the convergence criteria. moreover, economic and monetary convergence will need to be sustainable, which means that it can be maintained over the long term. on this basis, the new member states and europe as a whole will fully reap all the economic benefits we can expect from the enlargement. i thank you for your attention. je vous remercie de votre attention.