issues. it is important for the euro area to continue on its reform path. this is difficult but indispensable. i am aware that here in poland, people view the euro area ’ s crisis management with some scepticism. they fear a division of the eu into two blocs : the euro area and the rest. the creation of a dividing line is certainly not our goal. the single market binds all 27 eu member states closely together. this level playing field has to be preserved. but the crisis has shown that the economies inside the euro area are even more intertwined than those outside. therefore, reforms have to be more ambitious and rules stricter. this does not mean that those outside the euro area are excluded. as you are well aware, poland, for instance, has signed the euro plus pact and the fiscal compact. and the euro area is not a closed club : it is open to every eu member state that fulfils the convergence criteria on a sustainable basis. thank you. bis central bankers ’ speeches

, which commits countries to enshrining important fiscal rules in binding national legislation. the fiscal compact is an important step towards a fiscal union in the euro area. its timely ratification is now key. a real innovation is the macroeconomic imbalances procedure. it will help to detect and correct economic imbalances, for instance in house price developments. this should avoid situations like in ireland, where a bursting housing bubble, together with bank guarantees provided by the state, led to an abrupt fiscal deterioration. more legislative acts are under way to further increase the surveillance of national economic policies. once the “ two - pack ” has been adopted, it will be possible for draft national budgets to be examined in brussels. and revisions will be demanded if the budgets are not in line with the euro area ’ s fiscal rules. bis central bankers ’ speeches if implemented successfully, these measures will help countries to internalise an important point : any member of a currency union has to treat its economic policies as a matter of common concern. the euro area is already much closer to a political union than many of us realise. there is one broad area, however, where a good strategy is still missing. this is the area of financial markets. let me mention just one concern which needs to be addressed : the negative feedback loops between banks and national governments. the recapitalisation of a troubled bank by its government may lead to a deterioration of the government ’ s fiscal position. the deteriorating fiscal position in turn further weakens banks ’ balance sheets, through their holdings of sovereign bonds. this feedback loop has to be stopped. we have to move closer to a financial markets ’ union. a european bank resolution authority and a european deposit insurance scheme are two elements that could be used to address the nexus between sovereigns and banks. i see further issues that need to be addressed in the area of financial markets, for example the potential conflict of interest for national supervisors whose task should be to ensure financial stability and a smooth functioning of european financial markets, but who are – at the end of the day – accountable to a national parliament and the tax payers of one single country. this, from my point of view, is an argument in favour of the single european rulebook without loop - holes and a supervisory authority at the european level for systemically relevant financial institutions with a cross - border business model. concluding remarks let me conclude. the crisis in europe is still ongoing, but we have come a long way in addressing the most important