has two main elements. the first is the mandatory introduction of a balanced budget rule and a correction mechanism for deviations from balanced budgets at the national level. the second element envisages a strengthening of the excessive deficit procedure within the stability and growth pact. if effectively implemented, the fiscal compact will help to anchor market expectations on the sustainability of public finances in europe ( and narrow the currently abnormal spreads ). yet, governments now need to prove their commitment to these new fiscal rules by ensuring a rapid ratification of the new treaty on stability, coordination and governance in emu, which includes the fiscal compact, its transposition into national law and by living up to the rules and the spirit of the fiscal compact. the financial stability component of sound finances august 2007 saw the start of the financial turmoil with an increasing loss of confidence in the financial markets, a drying - up of liquidity and an increase in both risk premia and counterparty risks. ever larger volumes of so called aaa - rated privately issued assets became “ toxic ”. in september 2008, after lehman ’ s bankruptcy, money markets virtually seized up, financial losses rose rapidly and a process of deleveraging set in. financial stress spilled over to the real economy with a sudden and very severe impact on trade and growth. this led to the global financial crisis. how can financial markets be made sound again? this question raises many issues which i have not time to address here today but are fundamental, like : how can a better pricing of risk be insured? how can asset price bubbles be detected and corrected in time? how can procyclicality of financial markets be attenuated? and how can the financial system better align with the needs of the real economy? there have been several institutional developments. a new supervisory framework has been put in place in the eu in order to share information and best practices, foster cooperation and identify sources of systemic financial risks at an early stage. it consists of two pillars. the first covers micro - prudential supervision and comprises the european banking authority as well as other supervisory agencies. 2 supervisory colleges for pan - european banks are also starting to operate. the second pillar is dedicated to macro - prudential supervision and is centred on the european systemic risk board. the esrb can issue warnings and macroprudential recommendations whenever necessary. in addition, the new basel iii rules are being implemented to secure adequate capitalization of banks. what explains the rapid contagion that has characterised the sovereign debt crisis

luis de guindos : gabriel zucman ’ s contribution to research on wealth inequality and the redistributive effects on globalization remarks by luis de guindos, vice - president of the european central bank, on the occasion of the award of the bernacer prize to professor gabriel zucman, madrid, 11 october 2019. * * * it is a pleasure for me to celebrate with you the award of the 2019 bernacer prize to gabriel zucman, assistant professor of economics at the university of california, berkeley. gabriel ’ s creative work on measuring household wealth over time and across countries and his studies on the effects of taxation and globalisation on the accumulation of wealth have become increasingly influential among academic economists and policymakers. he is a deserved recipient of the bernacer prize, which is awarded each year to an outstanding young european economist working in the fields of macroeconomics and finance. this year ’ s prize has been awarded specifically for gabriel ’ s “ influential research on wealth inequality and the redistributive effects of globalisation ”. gabriel, together with his co - authors thomas piketty and emmanuel saez, has been one of the pioneers in this field, showing us how to use various data sources – aggregate sectoral accounts, household surveys, fiscal data, historical administrative data and unofficial records – to estimate the evolution and determinants of the wealth distribution over centuries. such a long time range is important, as many of the movements in wealth inequality are very gradual, which means that these changes can only be estimated reliably once enough data are available. at the same time, retrieving historical information on wealth poses multiple challenges. first, data on household wealth are much scarcer than, say, data on household income. second, the wealth distribution is heavily skewed toward its top tail, such that relatively few households hold a large fraction of aggregate wealth in the economy. consequently, to be able to measure wealth inequality, it is important that we include information about the very richest households. third, and especially for the richest households, one should account for all assets, including those held abroad, which tend to be more difficult to trace. a key approach used by gabriel to overcome these challenges is the “ income capitalisation method ”, which uses fiscal data on capital income to estimate the wealth distribution. although not always easily accessible, fiscal data are available for several decades and also cover the richest households. the method is therefore useful in