pivotal to economic health is competitiveness. in and of itself, a common currency is in the first instance an opportunity for greater competitiveness. a single currency area provides enterprises with a wider market, and one in which foreign exchange risks are eliminated. in turn, this creates a solid footing for international expansion. what is more : the more prominent a domestic currency and the economic area from which it originates, the easier it is for exporters or importers to use their own currency for transactions outside the currency area. in addition, enterprises benefit from a broad and well - developed financial market, and this kind of market is more likely to exist, the larger and more successful the relevant currency area is and the more trustworthy the currency. it is also easier in a single currency area for enterprises to achieve the critical mass required to be competitive in international trade outside the euro area. bis central bankers ’ speeches on the other hand, a large currency area represents a challenge for enterprises, too. they are exposed to stiffer competition on account of the larger number of market players. however, from a macroeconomic point of view, greater competition is to be welcomed, because it spurs innovation and promotes necessary reforms. against this backdrop, how are we to explain the lack of competitiveness in some euro - area countries? this does not primarily have to do with the single currency. the causes are to be found, rather, in excessive credit growth, deficient labour market regulation, and pay increases not backed by productivity growth. these are factors which were also clearly a national rather than a supranational responsibility. expectations that introducing the euro would automatically exert pressure to reform and bring about greater harmonisation between the economies of all euro - area countries have not been fully met. the crisis has shifted attention back to the competitiveness of euro - area economies – with the focus on countries which have lost some of their competitiveness. if the crisis is to be overcome, it is vitally important that these countries become more competitive again. and that, in turn, requires that work continue on the reforms which have begun. some initial success can be seen already, and this should encourage governments to stay the course of the path they have embarked upon. 4. the german current account surplus apropos competitiveness : in recent weeks germany ’ s current account surpluses have come under fire again. these, too, are often linked to the currency. germany ’ s large current account surpluses may be partly accounted for by

which some countries have to go in order to regain competitiveness and to repair their balance sheets. besides, being part of a monetary union will help them – rather than make it more difficult – to do so, because the greater trade links they have, allow them to benefit from faster growth in well performing member countries. although monetary policy cannot be tailored towards the needs of specific countries or regions, national developments are to some extent taken into account when deciding on monetary policy measures. that is, for instance, the case when the governing council decides on its non - standard measures. indeed, the monetary transmission impairments we observe are located mostly in those countries most affected by the sovereign and banking crisis. it is therefore no coincidence that we kept these measures in place, although we raised interest rates. in that respect, some people ask me whether i see any conflict between raising interest rates and maintaining such flexibility in liquidity allotment modes. the answer is “ no ” : both conceptually and technically, i see no problems in raising rates while at the same continuing to provide banks with unlimited liquidity. from a conceptual point of view i want to underscore that these two types of measures are geared towards different, but complementary, goals. the monetary policy stance is signaled by our key interest rates and is set as a function of the outlook for price stability. the non - standard measures, in contrast, are designed to ensure that the transmission of the monetary policy stance to the rest of the economy happens as smooth as possible, which should in turn allow the governing council to deliver price stability over the medium term. hence, these measures are complementary to each other, rather than conflicting. let me conclude. the governing council has shown it will do whatever is necessary to deliver price stability, which means taking the necessary measures to avoid a “ great depression ” - scenario as we did in 2008, but also to raise interest rates if upside risks to price stability threaten to materialise. we do have the will and the tools – including non - standard ones – to cope with the challenges in front of us. the flexibility of our framework should, however, be no excuse to postpone necessary adjustments, both in the financial and nonfinancial sector. and although we see encouraging signs – for instance in terms of competitive adjustment in some countries –, i think there is still a lot of work to do. thank you for your attention. bis central bankers ’ speeches