forget that adjustments will always be necessary to safeguard prosperity. this is especially true for the european crisis states. bis central bankers ’ speeches but more is required to ensure that monetary union can once again function properly as a whole. from now on, it must not be possible for the problems of individual countries or banks to jeopardise the entire system. an operational framework which reinforces the principle of liability and reduces mutual dependencies brings us a good deal closer to achieving this goal. i would like to thank you for your attention today – but, then, this is something i have always been pleased to receive in darmstadt. i am now very much looking forward to our discussion! bis central bankers ’ speeches

sovereign rights to the european level and thus combine the existing monetary union with a fiscal union. this echoes the sentiment of bundesbank president karl blessing, who in 1963 said that : “ a common currency and a federal central banking system are feasible only if, apart from a common trade policy, there is also a common fiscal and budgetary policy, a common economic policy, a common social and wage policy – a common policy all around. ” in my opinion, however, such a far - reaching transfer of national sovereignty to the european level requires the backing of both policy makers and the public at large. there was no such support when the monetary union was created and little has changed since. in the midst of the crisis, i do not see sufficient willingness on the part of eu governments or citizens – neither in germany nor elsewhere – to actually transfer sovereign rights on budget issues to the european level. merely increasing mutual liability – by introducing eurobonds, for example – without establishing greater mutual control in return, would only provide additional incentive to incur debt. after all, you wouldn ’ t entrust your credit card to someone if you weren ’ t able to control their spending. for the time being, therefore, the only answer to the crisis is to strengthen the maastricht framework. in doing so, more needs to be done to render the fiscal rules more binding – rules which have too often been stretched and ignored in the past. new agreements, such as bis central bankers ’ speeches the revised stability and growth pact and the fiscal compact, are steps in the right direction in this regard. however, it is vital that the new rules are applied in actual practice rather than existing only on paper. but the essence of a strengthened maastricht framework is that member states be held responsible for the consequences of their financial policy decisions. in this connection, it must also be possible – as a last resort – to declare governments insolvent without endangering the stability of the european financial system as a whole. to improve financial stability, the heads of state and government in euro - area countries have agreed to establish a european banking union. if implemented properly, this banking union can rectify deficiencies in competition in the banking sector through a strict single european supervisory mechanism. with an appropriate recovery and resolution regime, it can also strengthen the disciplinary effect which capital markets have on governments. the banking union once again puts the focus more squarely on the principle of liability. however, regulation must also be adapted