did not have anywhere near as expansive a policy as ours and it did not have the definition of price stability that we have to anchor inflation. its approach to the financial sector was also different, as we have banking union, resolution rules, stress tests, etc. to put it plainly, european supervisors, in particular the ecb, are not going to allow european banks to turn into zombie banks lending to zombie businesses, as was said in the case of japan in the 1990s. q : i understand that you met with syriza, an aspirant party for government in greece. how do you view them as an alternative? a : i would prefer not to make any comments on the political situation in greece. i do believe, however, that the appearance of protests in countries subject to financial assistance programmes [ implemented by the troika ] is the reflection of the huge demands that have been placed on the population. being in a democracy means that people have the right to voice their complaints. yet it is also a warning to leaders that when an economy is undergoing reform, sharing responsibility and effort is key. it is key to both the economic efficiency and political sustainability of the reforms. social protests are there to remind us that we cannot reform an economy by placing all the demands on workers and the most fragile parts of society. q : can the euro survive without debt mutualisation? a : the debate on the future of the euro should not be centred on instruments such as mutualisation. this is in my view the tail that wags the dog. the question to consider is to what extent we should share risk and sovereignty in order to make monetary union sustainable. since the beginning of the crisis we have made a lot of progress in creating various instruments to establish effective solidarity within the euro area, as well as governance that establishes responsibility at a national level. the process is not yet completed. for the euro to be sustainable, we need a stronger framework, particularly in relation to structural reform, where we need a strong and shared decision - making mechanism. fiscal union is part of this debate, but it can only be implemented when there is a sufficient degree of homogeneity between countries and when a mechanism for political responsibility becomes available. fiscal union without democratic control is not possible and is incompatible with democracy. this subject will come up, but not until further down the line. bis central bankers ’ speeches

make the best decisions. in the medium term, the euro area ’ s prospects rest on crucial factors that should not be overlooked. allow me to briefly run through them. on the external level, worldwide activity is fated to remain healthy and it is expected to help sustain european exports. on the internal level, investment should continue to benefit from financial conditions that are, historically speaking, exceptionally favourable in the euro area. it should benefit also from an improvement in businesses ’ results and their increased productivity due to past restructuring. moreover, private consumption is likely to grow in keeping with the growth in real income that is expected to continue. yet in the shorter term, since the second half of 2004, growth in the euro area has been modest, below the area ’ s potential growth rate. it is still positive, of course, but modest. there can be no doubt that the increasing cost of raw materials ( with crude oil heading the list ) has led to increasing uncertainty over economic prospects and that it continues to loom as a risk of far from secondary importance, as indeed do imbalances at the global level. furthermore, consumers are taking their time to rediscover the path of confidence, doubtless on account of a still difficult situation in the labour market, of difficulties and delays in the implementation of basic reforms, and of a feeling of insecurity due to insufficient budget consolidation. sure enough, a good monetary strategy guaranteeing the solid anchoring of price stability is a necessary precondition for economic growth. it is not a condition that is sufficient in itself, however. a budget strategy guaranteeing healthy public finances and structural reforms making it possible to raise the level of potential economic growth are also crucial. an examination of the trend in labour productivity in europe and in the united states is particularly enlightening in this connection. over the past few years, despite tangible progress in terms of overall employment growth and activity rates, a slowdown in the rise in hourly productivity in the euro area has been the main cause of the gap in economic growth between the euro area and the other major economy in the industrially advanced world, namely the united states. this, especially because over the same period of time the united states has enjoyed a strong boost to its hourly productivity, thanks in particular to its efficient use of new information and communication technology. thus while growth in hourly productivity in the 1980s stood at 2. 4 % on average in the euro area and at 1. 3 % in the united states, that