and a yearly net stable funding ratio will be complemented by macro prudential surveillance in a european system risk board closely associated with the general council of the european central bank. the us equivalent to this systemic risk board held its inaugural meeting at the beginning of this month. three european agencies for banking, securities markets and insurance start with a mostly coordination function, but have certain evolutionist competence clauses in their statutes. they have to walk the narrow line between cross border activities of banks and integration of markets on the one hand and competences remaining at national levels like deposit guarantee schemes, resolution procedures, insolvency legislation, i. e. everything that pertains to the tax payer who remains fiercely protected by national governments despite the spill - over effects of cross border activities, on the other hand. to tackle these effects through a potential 351 bilateral treaties in so many areas among 27 member states, can hardly be seen as a stable equilibrium in decision making nor a level playing field for economic activities in a single area. the new institutional set - ups at eu level therefore face some of the same problems we experience within the euro - area. the ultimate goal will however be the same : foster economic welfare through integration of markets and market players. this obviously will also be beneficial for the optimal functioning of a single monetary policy at euro area level. the transfer of private debt into public debt as such was similar to what was observed in the whole industrialized world. but the weak institutional framework for fiscal discipline at national and at euro area level as well as the absence of control by financial markets was emphasized in some countries by three developments : 1. an overextended national financial system 2. an insufficiently strong starting position in the cyclical downturn in terms of deficit and debt 3. a rapidly deteriorating competitive position as shown for example in unit labour costs or current account balances suddenly markets reacted and overreacted while governments excelled in denial and cloak and dagger stories. this slow reaction forced the ecb into action as a back - stop exposing the unfinished work of the institutional set - up of emu just as the financial crisis had exposed failures in the macroprudential area throughout the industrial world. in both cases, the welfare price of overly relying on market reaction only has become clear. now credible deleveraging has been implemented in many countries. this action should allow those countries to be back on a sustainable trajectory of growth in the medium term. a crisis management facility, the efsf,

this development has been reversed over the past 12 months, however. in the same vein, the dispersion of gdp growth is quite similar on either side of the atlantic. before the crisis the dispersion of growth rates was around 2 percent, in both the euro area and the us. dispersion increased somewhat during the crisis in both currency areas but remained broadly in line with pre - crisis patterns. moreover, in both currency areas there are comparable patterns in the dispersion and developments of competitiveness. in the us as well as in the euro area, regions can be found with persistently above or below average unit labour cost growth – a good measure of competitiveness. in the euro area, greece, portugal and ireland, in particular, had progressively lost competitiveness. they are now trying to catch - up by implementing adjustment strategies. germany, by contrast, had lost competitiveness in the reunification process but has managed to regain competitiveness over the same period of time. looking at the most and least competitive states in the us states over the same period of time, we see that some states have suffered from large or persistent increases in unit labour costs. some still exceed the national average by 20 percent. other us states have been improving their competitiveness compared to the national average over the past decade. public finance, household savings and trade on a consolidated base public finances in the euro are in a much better shape than in the us. the euro area as a whole will run a budget deficit of about 4. 5 percent of gross domestic product this year. the international monetary fund ( imf ) expects a us budget shortfall of about 10 percent of gdp this year. the uk government expects for this fiscal year to meet its deficit target of 7. 9 percent of gdp, down from 9. 3 percent of gdp in the previous one ending in april 2011. the budget forecasts however are based on the assumption that the economy will grow 1. 7 percent in 2011 – in spite of economists ’ recent forecasts of around 1. 0 percent. according to the imf the aggregate debt - to - gdp for the euro area stands at 87 percent. figures for the uk are similar. for the us the debt - to - gdp ratio in 2011 is expected to be 100 percent. in japan debt - to - gdp exceeds 200 percent. as far as private households ’ financial positions are concerned the euro area is in the best position of all major currency areas. in 2010 gross savings as a fraction