against eurobonds and simple fiscal unification, but with the european stability mechanism and the planned banking union we are effectively creating something like common fiscal liabilities and common bonds, just with less transparency. arguably, the german mark was – from a monetary point of view – a rather well administered pan - european public good. after the euro, this public good became overconsumed. philipp bis central bankers ’ speeches bagus, sitting today here in this room, argues that the euro is a classical example of a “ tragedy of the commons ” from the start, and that the smaller and weaker countries therefore inevitably ended up racing to make maximum use of the commons for their own benefit at the expense of the rest, thereby destroying this shared asset. the german mark can indeed be viewed as a sort of public good that became the subject of decisions made outside the public sphere in germany and hence was fundamentally transformed. the average quality of the public good called monetary stability and good currency in the eurozone will very probably go down with the ultimate demise of the former european monetary hegemon. let that be a warning to those countries which have not yet signed up to the monetary integration project. the fall of the former hegemon is relevant not only for the current crisis, but also for the future of the monetary order in europe. and here i do not see any positive perspectives, i must bitterly admit. i am not saying that the euro has to collapse, but i am pretty sure that if it prevails, it will be a completely different currency implying completely different monetary conditions from what the germans in particular hoped for. and germany faces a tough choice – further integration or a perfect monetary order. this question is rather new and painful. the answer to it will influence all of us, i believe. so let ’ s wish them good luck. thank you for your kind attention. bis central bankers ’ speeches

market. in the meantime, if the bank does not reduce the amount outstanding of its jgb holdings, it will be possible to avoid a rise in long - term real interest rates – a factor that leads to a decline in policy effects – thereby firmly ensuring the accumulated effects of the bank ’ s jgb purchases. on this basis, i have been proposing since april 2015 to reduce the annual pace of increase in the amount outstanding of the bank ’ s jgb holdings. in proceeding with the reduction, i think that it is possible to diminish its effects on financial markets by providing a thorough explanation, or forward guidance, to the markets that the reduction will actually enhance the stability and sustainability of the bank ’ s jgb purchases. moreover, i think that measures such as the review of the negative interest rate policy give due consideration to the stability of the functioning of financial markets and financial intermediation, which are critical infrastructures of economic activity. implementation of such measures will bring about efficient resource allocation through appropriate operation of said functioning, and thereby support positive efforts by the government and firms toward increased productivity so that such efforts lead to a higher potential growth rate and ultimately to an improvement in people ’ s lives. lastly, i believe that improving communication with financial markets and enhancing flexibility are the immediate challenges for the bank in the conduct of monetary policy. as the bank has emphasized its stance of achieving the price stability target of 2 percent at the earliest possible time, overly heightened expectations for additional monetary easing tend to be observed in financial markets whenever there is an expectation that the outlook report will present a delay in the projected timing of the year - on - year rate of change in the cpi ( all items less fresh food ) reaching around 2 percent. in addition, since the introduction of the negative interest rate policy, views have become increasingly widespread that the bank will launch unforeseen easing measures at an unexpected timing. i presume that these phenomena not only have become one of the factors behind reduced predictability of monetary policy and increased volatility in financial markets, but also have led to impairment of the credibility of the bank ’ s monetary policy conduct. for this reason, i consider it important that the bank thoroughly communicate with financial markets regarding its conduct of monetary policy and bear in mind the need to provide a detailed explanation so as to narrow the perception gap between them. in order to achieve the 2 percent price stability target, i think that it is vital to have a positive change in economic structure that would increase