fiscal room for manoeuvre. hence, a credible growth policy will undoubtedly raise the capacity of monetary and fiscal policies to fulfil their stabilisation mandates. to conclude, i would like to encourage the emu lab to work on a broader concept of policy mix that would encapsulate not only monetary and fiscal policies, but also macroprudential policies and the dimensions of the single market that will make the euro area more resilient to a wide range of shocks, and stabilisation policies more effective. thirty - two years after the maastrichtian policy mix, let's build the florentine policy mix! i bartsch ( e. ), benassy - quere ( a. ), corsetti ( g. ) and debrun ( x. ), it's all in the mix : how monetary and fiscal policies can work or fail together, geneva report on the world economy, 15 december 2020 ii draghi ( m. ), le chomage dans la zone euro, speech, annual central bank symposium in jackson hole, 22 august 2014 iii dao ( m. ), dizioli ( a. ), jackson ( c. ), gourinchas ( p. - o. ), leigh ( d. ), unconventional fiscal policy in times of high inflation, imf working papers, september 2023 iv furceri ( d. ) et zdzienicka ( a. ), the euro area crisis : need for a supranational fiscal risk sharing mechanism?, open economies review, 26, 683 – 710, 2015. v francois villeroy de galhau, from a capital markets union to a genuine financing union for transition, speech given at eurofi, ghent, 23 february 2024 vi allen ( t. ), boullot ( m. ), dees ( s. ), de gaye ( a. ), lisack ( n. ), thubin ( c. ) and wegner ( o. ), climate transition scenarios : short - term economic effects, banque de france eco notepad, 8 december 2023 vii gautier ( e. ), grosse steffen ( c. ), marx ( m. ) and vertier ( paul ), decomposing the inflation response to weather - related disasters, banque de france working paper, december 2023 4 / 4 bis - central

not increase dramatically before the crisis ( figure 4 ). ( private debt ratios, and in particular the size of the bank and near - bank systems did increase, but that is a somewhat different story, to which i will turn shortly ). it ’ s possible alternatively that there was a multiple equilibrium here, with the “ good ” or low interest equilibrium ( with a self - fulfilling degree of confidence in the creditworthiness of all the sovereigns ) being selected by the market at the start of the euro, and events during the financial crisis – not least those associated with greece – having tripped the system into the “ bad ” or high interest equilibrium with default risk premia moving a number of sovereigns into a more challenging debt sustainability position. most likely, what we have seen is a combination of factors : ( i ) a sharp reduction in risk appetite resulting in even little - changed debt ratios, as in italy, looking more challenging and in need of a risk - premium ; and in addition ( for most countries ) ( ii ) a sharp increase in debt ratios as governments reacted to the crisis ( including, but not at all confined to, the socialisation in most countries of some private banking losses through their assumption by governments ) ( figure 4 again ). the increased sensitivity of sovereign spreads to ratings, and the increased range of ratings themselves – both illustrated in figure 2 – suggest that both factors are at work. bis central bankers ’ speeches ( as spreads widened in stressed countries, their fluctuations – which would not concern hold - to - maturity investors – added a risk factor for others and probably ratcheted up the average level of the spreads. ) in the specific case of ireland, the depth of the recession and the remarkably high elasticity of tax revenues and the government deficit to the downturn, combined with the unfortunate decision to lock - in a very comprehensive bank guarantee before the potential scale of the banking losses could at all be appreciated, meant that ireland ’ s actual and prospective general government debt made a shocking turnaround from about 25 per cent of gdp in 2007 to 117 per cent just five years later. historians will debate the exact triggers for the market ’ s loss of confidence in the irish sovereign. even as late as april 2010, after the first sampling indicated the scale of the banking losses, sovereign spreads were little more than 1 per cent. by november of that year ( just a few weeks after the deauville statement which persuaded the markets that private sector holders of euro sovereign debt would not be