lorenzo bini smaghi : eurozone, european crisis and policy responses speech by mr lorenzo bini smaghi, member of the executive board of the european central bank, at the goldman sachs global macro conference – asia 2011, hong kong, 22 february 2011. * * * i wish to thank huw pill and isabel vansteenkiste for their contributions to this speech. i remain solely responsible for the opinions contained herein. 1. introduction ladies and gentlemen, it is a pleasure to have the opportunity to speak at this distinguished gathering here today. we are certainly living in “ interesting times ”, as the chinese say. slightly “ too interesting, for too long ” i would add. over the past few years, we have all witnessed a global financial crisis, which has caused profound changes in the outlook for the global financial system and global economy. this morning, i will focus on one manifestation of the broader financial turmoil : the sovereign debt crisis experienced by some euro area countries. in my remarks, i will first discuss the origins of this crisis, and then draw some comparisons with the emerging market experience – particularly in asia. after reviewing how the european authorities have responded to the crisis, i will conclude with some remarks on the outlook for the euro area. while we certainly face considerable challenges at present, i am confident that europe will emerge stronger from the current episode, not least because some of the existing gaps in the institutional framework for economic and monetary union ( emu ) will be filled. in the end, this will make the whole structure more stable and robust. 2. origins of the sovereign debt crisis in europe it is striking that those countries which experienced the european sovereign debt crisis in 2010 – notably greece and ireland – were among the best performers in terms of growth in economic activity within the european union ( eu ) over the decade preceding the crisis ( charts 1 and 2 ). indeed, ireland was called the “ celtic tiger ”, drawing a parallel with the fastgrowing “ asian tigers ” in earlier decades. while prima facie a paradox, the relationship between strong pre - crisis growth and the severity of the crisis itself reveals much about the origins of the underlying economic, structural and institutional weaknesses that lie at the heart of recent events. the introduction of the euro in 1999 led to a sharp fall in real interest rates especially in the so - called peripheral countries of the euro area, as nominal interest rates converged to low german levels ( chart 3 ). in addition, the credibility of

: / / www. bankingsupervision. europa. eu / press / speeches / date / 2020 / html / ssm. sp200617 ~ 74d8539eda. en [ 4 ] keynote speech by luis de guindos, vice - president of the ecb, at the joint ecb and european commission conference on “ european financial integration and stability ”, frankfurt am main, 27 may 2021, https : / / www. ecb. europa. eu / press / key / date / 2021 / html / ecb. sp210527 ~ 6500964615. en. html [ 5 ] interview with christine lagarde, conducted by dominique lecoq and marc aubault on 29 july and published on 31 july, https : / / www. ecb. europa. eu / press / inter / date / 2020 / html / ecb. in200731 ~ 7df348b85b. en. html [ 6 ] statements by the governor of the bank of greece on the occasion of the world environment day on june 5th 2019 https : / / www. bankofgreece. gr / enimerosi / grafeio - typoy / anazhthshenhmerwsewn / enhmerwseis? announcement = 2d9a3a31 - a62f - 49a0 - ab3c - 4bfb9acc6267 and june 5th 2020 https : / / www. bankofgreece. gr / enimerosi / grafeio - typoy / anazhthsh - enhmerwsewn / enhmerwseis? announcement = 17fce009 - 57ce - 4a7e - bda6 - 65145811ec27 [ 7 ] omfif special report : central banks and climate change, https : / / www. omfif. org / wpcontent / uploads / 2020 / 02 / esg. pdf [ 8 ] omfif tweet following the special report : central banks and climate change https : / / twitter. com / omfif / status / 1156559680120008704 [ 9 ] the responsible banking principles of the united nations environment programme finance initiative https : / / www. unepfi. org / banking / bankingprinciples / [ 10 ] https : / / www