with financial turmoil. let me just remind the opposition of the us congress, and the us people in general, to support with 20 billion dollars the rescue of mexico in 1995. many of the arguments used today against the support for greece are similar to those used against mexico. with the benefit of hindsight the decision taken in 1995 by the us administration is now widely praised, as will be the case in a few years – i believe – for the european decision to support greece. let me also recall the lack of support of the american people, and of congress itself, for providing the us administration with the funds necessary to sustain the us financial system through the tarp programme in september 2008. the us president had to go public, stating that “ the instability can ripple throughout and affect the working people and the average family and we won ’ t let that happen ” before congress finally voted the package. let me move to the economic reasons underlying the choices which have been made over the past few months, which are equally important. they are not always clearly perceived, especially across the atlantic. let me list a few. first, past experience has shown clearly that within an economically integrated area like the euro area a currency devaluation does not allow a growth stimulus that would support faster fiscal consolidation. the countries which had to make strong corrective fiscal manoeuvres before the euro – as was the case in italy after leaving the erm in september 1992 – have suffered large interest rate spreads for a protracted period, because of renewed uncertainty about the monetary regime after the devaluation, as well as about the fiscal system. with every devaluation, inflationary risks rapidly appeared, which required more monetary tightening than would be the case within the euro. several countries, like belgium, ireland and the netherlands implemented fiscal consolidation while maintaining a stable exchange rate and a high primary budget surplus ( i. e. net of debt interest ). another forgotten aspect is that the possibility of revaluing the currency has not allowed more virtuous countries to insulate themselves from the exchange rate instability affecting neighbouring countries, particularly in those which devalued. after the exchange rate realignments, germany recorded in 1993 a recession comparable in size to that of france and italy. another aspect that is also often ignored is that the return to a national currency is not an event comparable with a change in the exchange rate parity. it would involve a renegotiation of all contracts, especially financial ones, within individual

for societies like the us, where the funding of welfare rests largely on the private sector, rather than the public. if the economic growth potential is reduced, investors must also adjust their expectations of being able to finance their health care, education plans and their pensions. i would now like to move on to the second area of intervention – aimed at restoring sustainable growth, to which the us and european authorities are committed. it concerns financial regulation. there ’ s close cooperation on this agenda item and it ’ s taking place in various working groups, in particular in the basel committee and the financial stability board, which includes representatives of 20 major industrial countries. coordination is undoubtedly more difficult in this field, not only because of the structural differences between the financial markets but also because these markets are partly in competition with each other, and operators are seeking to influence the respective authorities to shift regulatory changes in the desired direction. i do not want to list here the areas of convergence and divergence between the two sides of the atlantic in negotiations that are not yet finished. i would rather express – in my personal capacity – a number of concerns on issues which have not yet been clarified and are still marked by much uncertainty. the first concerns the scope of application of financial regulation, which should be strengthened to give greater credibility and stability to the system. the basel committee is focusing mainly on the banking system in order to strengthen the capital and liquidity requirements, and particularly to reduce the pro - cyclicality of the rules. there is a commitment to establish new rules no later than the g20 summit this autumn, for gradual implementation by the end of 2012. however, while in europe it is already known that the new rules, once agreed, will be included in a community directive with immediate application in all member states, it is unclear what the degree of implementation in other countries, particularly the us, will be. in the light of what happened with basel ii, the risk of only partial application is a concern. another source of concern is the “ shadow ” financial system not previously subject to regulation. the g20 summit a year ago in london indicated the general commitment not to leave significant parts of the financial sector, such as investment banks, hedge funds, private equity funds and so forth, outside the regulatory perimeter. work on this part of the financial system is not progressing as hoped, however. there is a risk, again, of focusing only on banking, and overlooking an important part of the financial system, whose influence has come to dominate