. as experience has shown, “ the constructive ambiguity ” with respect to the market interpretation of the no bailout clause embedded in the treaties has not really been effective. the esm could play a larger role in this respect. capital markets union is a natural complement to the banking union. it aims at promoting financial integration and enhancing shock absorption via financial markets by facilitating private risk - sharing whilst reducing opportunities for regulatory arbitrage. cmu should also support the smooth and homogenous transmission of monetary policy. a number of concrete measures are listed in the commission ’ s action plan to strengthen : securitisation, insolvency regimes, and tax legislation need to be prioritised. cross - border barriers to clearing and settlement should be removed. i welcome the commission ’ s communication on accelerating the cmu. swift implementation is of the essence. implementation of promises and adherence to new rules is key as a result of these measures, our economic and monetary union is considerably more resilient today than it was at the peak of the crisis. the strengthening of the recovery in the past year, in spite of challenges on several fronts, is testimony to that. yet the strengthened framework can only deliver stability over the longer term if national governments keep their 2 / 3 bis central bankers'speeches promises and adhere to the rules. for economic and fiscal policies this means : structural reforms are necessary to raise productivity and improve the business environment. fiscal policies should be designed so that they support the economic recovery by focussing on productivity - enhancing measures. at the same time, fiscal rules need to be respected to build confidence in the sustainability of national finances. more decisive action by national governments and respect for the rules that we have commonly agreed on is essential for a stronger and safer economic and monetary union. it is also a vital prerequisite for any further move towards shared fiscal sovereignty in the euro area. the five presidents ’ report has outlined a vision for improving the architecture of emu and provides a roadmap for completing political and fiscal union. let me share with you some considerations on frequently floated ideas : in the long run, sound fiscal policies at national level could be accompanied by the establishment of a euro area fiscal capacity with own resources, central control of spending and democratic control on the european level. this would provide a european automatic stabiliser and could allow financing european public goods. this would lead in the direction of the practice of federations, where spending on functions such as defence or r & d is

and overcoming costly fragmentation in the european market for cards. consumers and merchants in the card payments market are likely to benefit most from sepa if there is sufficient competition. w. bolt and h. schmiedel : “ sepa, efficiency and payment card competition ”, working paper series, ecb, forthcoming. so far, a critical factor in the emergence of an additional european card scheme has been the uncertainty surrounding interchange fees. clarity has now been provided through the “ tourist test ” or “ equivalence test ” methodology. the market would feel more comfortable with a list of “ what is allowed ” and “ what is not allowed ” regarding interchange fees. however, we need to accept that dg competition ’ s mandate is to act on specific cases and not to define the rules. i am aware of the uncertainty within the banking community on whether the “ equivalence test ” will from now on be the guiding methodology or whether it will just be an interim solution. of course, i cannot answer this for the commission, but the “ equivalence test ” is, in my view, one of the possible methodologies, and it has the advantage that the competition authority seems to be comfortable with it. this does not mean, however, that market participants cannot conceive other models and methodologies – but they will clearly have to be in line with competition rules. allow me a final reflection on interchange fees : one can certainly find alternative ways and arrangements for replacing the mifs. however, before entering into complicated undertakings and setting up new structures, a banker should not disregard the possibility of lower interchange fees being translated into higher earnings through the volume effect. recent research work focusing on the spanish market in the period from 1997 to 2007 found evidence that banks were even better off after the intervention of authorities on interchange fees because the increase in the volume of transactions offset the decrease in pertransaction revenue. 6 the market for card schemes is in a decisive stage of development. we are very much concerned about the possibility that small national schemes such as dutch, finnish and irish schemes will be replaced by the international schemes. i would invite the banks behind these schemes to also consider the possibility of joining one of the new european card scheme initiatives. let me clarify once more that europe needs visa and mastercard, since they are currently the only schemes that offer a pan - european card payment solution. but we also need sufficient competition. for the moment, there are three new card scheme initiatives, each with their own strengths and