overall risk - sharing level to about 80 %. it is important to note that the rainy day funds in place in many us states do not constitute a fiscal risk sharing scheme between the individual states, either. many us states are strictly forbidden to incur debt. thus, they set budget surpluses aside in a rainy day fund to be used during an economic downturn. and every state is using only its own fund. in the euro area, the fiscal rules permit individual member states with sound public finances to take effective fiscal measures against cyclical downturns or crises, without breaching the fiscal rules or having to resort to outside assistance. this makes the potential benefits of a rainy day fund less relevant for us. clearly, much could be achieved in the euro area by strengthening cross - border corporate equity funding. to tear down the walls in european capital markets by standardising national insolvency regimes is, in my view, just one particularly important step. investors need to be able to count on a level playing field existing throughout europe. not only would that promote private risk sharing ; it would also reduce capital flows to less productive businesses and stimulate flows to more productive ones. that would boost economic momentum, as oecd research confirms. 3 what is more, the development of equity markets, including in europe, is suffering from the preferential tax treatment given to debt over equity capital. 4 interest payments can be deducted from taxable income ; equity costs cannot. eliminating this bias, which i admit would not be trivial in political terms, would encourage businesses to make greater use of equity capital as a funding instrument. and that, in turn, would facilitate greater private risk sharing whilst at the same time reducing the debt bias. i mentioned earlier that another way in which risk could potentially be shared might be for enterprises and households to take out cross - border loans in times of crisis. yet this mechanism hardly worked at all during the crisis in the euro area. one of the steps taken in europe to prevent the repetition of a financial crisis was to create the banking union. with its single supervisory mechanism and rules on bailing - in creditors in the event of bank failures, the banking union bolsters the banking sector ’ s resilience. this makes a loss of confidence in national banking systems less likely. and less danger of a fragmented 5 / 7 bis central bankers'speeches financial system stabilises lending, particularly in turbulent times. a common european deposit guarantee scheme could, in theory, even

nout wellink : the role of national central banks within the european system of central banks - the example of de nederlandsche bank introduction by dr nout wellink, president of de nederlandsche bank and president of the bank for international settlements, to the paper ‘ the role of national central banks within the european system of central banks : the example of de nederlandsche bank ’, oesterreichische nationalbank conference ‘ competition of regions and integration in emu ’, vienna, 13 - 14 june 2002 * * * introduction i would first like to thank the oesterreichische nationalbank for inviting me to this conference and take up the challenge of discussing the role of national central banks in europe. clearly, this role underwent a fascinating metamorphosis with the introduction of the single currency. suddenly, a strong, european dimension was added to these institutions that were traditionally largely confined to national boundaries. consequently, the national central bank in europe is of a peculiar sort and has a double identity. on the one hand, it is deeply rooted in national tradition and sovereignty, which reflects specific national tasks and responsibilities. on the other hand, it is part of a system of central banks responsible for a fully supranationalised monetary policy and related, common tasks. let me now briefly outline my paper on the role of national central banks in europe. first, i will shortly discuss the general framework of the european system of central banks. subsequently, i will touch on the system tasks and related national responsibilities. here, i will specifically spend some time on financial stability and supervision. clearly, this policy area has seen some major developments recently, both on the national and european level. the european system of central banks what exactly is the european system of central banks? what explains its unique institutional and operational set - up? these are crucial questions in analysing the role of national central banks or, for that matter, understanding monetary union in general. nevertheless, the questions are seldom asked, let alone answered. since the second world war, european integration has been a co - operative effort in which common objectives in principle override the size and power of the individual participants. the european system of central banks is a both a product and a reflection of this european community of member states. hence, the fundamental notion underlying the system is a joint and equal responsibility to carry out the tasks assigned by the treaty. in this set - up, the ecb operates as the legal entity that links