been done since the crisis broke out. first, the rules of the stability and growth pact were tightened and a fiscal compact was adopted in order to restore confidence in public finances. second, a procedure for identifying macroeconomic imbalances at an early stage was established. and third, a crisis mechanism was set up to serve as a “ firewall ”, safeguarding the stability of the financial system in the euro area. in addition to these measures, the euro area took a major step toward deeper financial integration. on 4 november 2014, the first pillar of a european banking union was put in place. on that day, the ecb assumed responsibility for supervising the 123 largest banks in the euro area. together, the banks concerned account for more than 85 % of the aggregate balance sheet of the euro area ’ s banking sector, making the ecb one of the biggest banking supervisors in the world. bis central bankers ’ speeches taking banking supervision from the national level to the european level has three concrete benefits. first, european banking supervision allows banks in the entire euro area to be supervised in a uniform manner according to the same high standards. these harmonised standards will emerge from the cross - border sharing of experience, noting the best aspects of each national approach to banking supervision and adopting these for use at the european level. second, european banking supervision makes it possible to effectively identify and manage cross - border problems. this is essential because large banks are usually active in more than one country. third, taking banking supervision from the national to the european level will add a degree of separation between supervisors and the banks they supervise. this will prevent supervisors from handling their banks with kid - gloves out of national interest. as you can see, we have come to expect a lot from european banking supervision. and in 2016, the single supervisory mechanism will be supplemented by a european resolution mechanism for banks. this will be the final step on the road to banking union and a major step forward in designing a better framework for the european monetary union. however, to make monetary union more stable, the emu framework needs further reform, too. the primary objective should be to increase the incentives to make sound and responsible decisions within the euro area. to this end, it is important to rebalance liability and control. either we establish centralised rights to intervene in national fiscal policies or we strengthen the principle of individual national liability. as i do not see enough support for the great leap forward – either in the political sphere or among electorates –

need to adjust. and it has been clear from the outset that the necessary reforms and adjustment measures require patience. in the meantime, major progress has been made as most of the crisis countries have managed to improve their public finances and to solve their structural problems. current account deficits have largely been reduced and some countries are now running a surplus. price competitiveness in the crisis countries has also improved significantly. measured in terms of the deflators of total sales, competitiveness has improved by 6 % in portugal, 9 % in spain and 14 % in greece. to some extent, these figures can be attributed to the depreciation of the euro. nevertheless, the figures for the countries i have just mentioned are also positive when measured in terms of the euro area. needless to say, the job has not been finished yet. structural reforms have been implemented, but more needs to be done. monetary policy measures cannot substitute structural reforms. the eurosystem has done a lot to prevent the crisis from escalating but it cannot address the underlying problems of the crisis. structural reforms are the best way to generate sustainable economic growth and create employment. it is becoming increasingly clear that the efforts are bearing fruit : unemployment rates seem to have peaked, and the economies are growing again. this makes it all the more important for the achievements not to be compromised. it therefore worries me that greece might go backwards in terms of its reform agenda. greece ’ s newly elected government objected to complying with the financial assistance agreements and intended to withdraw some of the reforms that had already been adopted. there were even brief calls for further debt relief. however, after intense negotiations among the finance ministers of the euro area, the greek government settled for requesting an extension of the current programme. after the greek government had also committed to pushing ahead with economic and fiscal reforms, the finance ministers of the euro area approved a four - month extension of the programme. the details of a new financial assistance programme need to be worked out by summer. greece certainly needs further assistance from the rest of the euro area. however, further assistance can only be granted if greece continues with its efforts to restore sound public finances and competitive economic structures. to regain investors ’ trust, sustainability and competitiveness are necessary requirements. suffice to say, it is not enough to correct misalignments solely at the national level, either in greece or elsewhere in the euro area. we also need structural reforms at the european level. and here, a lot has