and infrastructures operate on a global basis. effective reform requires mutually consistent global standards – and while international cooperation to date has been good on many fronts, progress is uneven, and the devil is in the details of implementation. we need all national authorities to resist the temptation to favor domestic financial interests over the interest of achieving a true level playing field globally. and we should resist the urge to favor locally controlled infrastructures where global solutions would better advance the collective financial stability interest. instead we should work to ensure fair access to global infrastructures. also, it is important that national regulators have access to data and a role in the regulatory oversight of such global infrastructures when that is relevant to their own national financial stability agendas. in the united states, i think we have made more progress in bolstering the resilience of our banking institutions than we have on the other tracks. there are two elements to this. the first element is the increase in capital that has already occurred. the major u. s. banking institutions are much better capitalized today than they were in the fall of 2008. the increase in capital reflects a number of factors – a long period of low capital payouts relative to income, significant equity raises, as well as sizable asset dispositions that have shrunk the balance sheet and bolstered capital. the fact that credit losses have abated and this has enabled banks to release reserves has also been important. the second element is the international agreement to implement new basel iii capital standards. not only will basel iii significantly raise the tier i capital standard when it is fully implemented in 2019, but also it raises the quality of capital by putting the emphasis on tangible common equity. in addition, we and our partners in the international community are in the process of implementing capital surcharges for large, systemically important financial institutions ( sifis ), bis central bankers ’ speeches with the size of the surcharge dependent on size, complexity, and interconnectiveness. i appreciate that it is impossible to calibrate “ sifiness ” precisely, but this is not a valid argument for no surcharge. the logic behind the sifi surcharge is that the failure of a systemically important institution would generate a very large shock to the rest of the financial system. as a consequence, it makes sense to require higher capital for such firms to reduce their probability of failure. in addition, the federal reserve ’ s efforts to improve banks ’ capital planning

strengthened by intensifying crisis prevention measures. this comprises, in particular, a macroeconomic surveillance procedure, as is currently envisaged, and tighter restrictions for fiscal policy, including improved monitoring and implementation. the aim of lowering deficit and debt quotas has to leave the page and become a reality. this is the only way that public finances can absorb macroeconomic shocks without endangering a state ’ s solvency. furthermore, it is essential to make the financial and banking system significantly more robust in order to limit contagion despite ever closer financial ties. this necessitates further improvements to regulation and financial system supervision, and a much greater resilience to crises. if properly designed, a crisis resolution instrument, such as the esm, can provide a vital contribution to stabilisation. all in all, i do, however, currently see the danger that joint liability is being extended, with the result that the existing institutional framework is being clearly stretched, but with the possibilities for control and intervention lagging behind. this poses an acute threat to the balance between liability and control. whereas, for instance, the fiscal compact aims to ensure more stringent prevention measures, the clear wish to forego risk premiums if aid programmes are made use of significantly weakens the incentives for sound public finances. the alternative to a “ return to maastricht ” is the transition to a true fiscal union, which is currently the subject of intense debate. this idea is nothing new. this issue was a topic of debate at the bundesbank long before monetary union was even established, and this issue was again raised during the financial crisis. allow me to make one preliminary remark before i move on to discuss the individual aspects of a possible fiscal union in greater detail. “ fiscal union ” is a difficult term to pin down and can take a number of forms. provided it is adequately structured, a fiscal union can prove to be the cornerstone of a coherent institutional framework for the monetary union. however, even such an ambitious project as a fiscal union can by no means solve the problems that many countries are facing today : high unemployment and a lack of competitiveness are not going to disappear overnight. the need for adjustment would still exist and given the strong interdependencies, it would probably require an even closer oversight with regard to the macroeconomic imbalances in the member states. above all, however, the transition to a fiscal union would by no means guarantee a stability union. the crucial point