decisions of the governing council. in december 2000, the eurosystem decided to release, for the first time, its euro area economic staff projections, with a view to improving transparency and communication. thus, from the point of view of the accountability of the central bank in a democratic society – that is to say the duty to explain, justify, convince, whenever possible, and take full responsibility vis - a - vis public opinion for decisions taken –, the eurosystem strives to meet the highest standards of the main central banks in the world. 2. the euro significantly contributes to growth in europe by enhancing the co - ordination of economic policies a few years ago, it was necessary to convince a great number of sceptics, in europe as well as in the rest of the world, that the euro would really be launched. many observers believed that the single monetary policy would never succeed! facts have disproved this conclusion. however, other observers still sometimes evoke the supposed fragility of the euro area stemming from the supposed economic and structural divergences between euro area countries. how can we answer this important question? firstly, monetary union does not necessarily imply that, at any given point in time, all participating countries will have the same rate of inflation or growth, even though the creation of the euro was based on the successful completion of a convergence process. let us take inflation for example. inflation divergences across countries or regions are quite natural in a monetary union. in the euro area, long - term convergence to a common level of prices naturally gives rise to different inflation rates across countries. the convergence of productivity and living standards creates a trend towards price convergence. now, present differentials in the euro area are not very large, in comparison with those sometimes observed in the united states, which is a long established monetary union of comparable size. my intimate conviction is that we will witness further european integration and, in the medium term, an increasing correlation of economic developments in the area. several academic studies show that business cycles are becoming more synchronous across europe. secondly, the question has often been raised as to whether emu can be a success without some form of enhanced political union. indeed, to achieve this, the correct mix is required between fiscal, economic and monetary policies. in the european union, member states are responsible for conducting economic and fiscal policies. we therefore believe that these policies should be closely co - ordinated. co - ordination is stressed in the

new issuance of asset - backed securities ( abs ), which provided funding for auto loans, credit cards, student loans, and other loans to consumers and small businesses, had virtually ceased. investors had lost faith in the quality of the triple - a ratings on the securities, and the complex system that funded the securities see congressional budget office, “ the budgetary impact and subsidy costs of the federal reserve ’ s actions during the financial crisis ( 7. 79 mb pdf ) ”, may 2010. known as the “ shadow banking system ” broke down. without access to funding, credit for households and small businesses would have become even less available and more costly. the federal reserve designed the term asset - backed securities loan facility, or talf, to provide funds for the purchase of securities backed by new consumer loans. in the end, nearly 3 million auto loans, over 1 million student loans, about 850, 000 small business loans, and millions of credit card accounts were supported by talf - eligible securities. talf worked. it served its intended purpose of unlocking lending, the lifeblood of the u. s. economy. as pleased as i was to see that talf worked, i was even more pleased when it eventually became unnecessary. abs issuance remained stable in the months after talf ended. while liquidity helped restore the market for consumer loan securitization, liquidity alone did not solve all the consumer credit problems exposed by the crisis. additional consumer protection would also be needed to restore healthy consumer lending. enhancing consumer protection the first signs of serious consumer credit distress appeared in the subprime mortgage market, and much attention has been deservedly paid to correcting problems in that market. in hindsight, though, we also see that the developments in the u. s. mortgage market, fueled by the credit boom, revealed acute weaknesses in mortgage finance that eventually had farreaching effects on many other forms of credit. the gradual but widespread declines in underwriting standards, breakdowns in lending oversight by investors and rating agencies, and increased reliance on complex and opaque credit instruments led to the current set of circumstances in which lenders are skittish about lending, borrowers are skittish about borrowing, and investors are skittish about investing. the credit markets must reemerge in sounder and more transparent ways in order for “ normal ” lending activity – whatever that will mean in the coming months and years – to reemerge. essential to jumpstarting market