, our union needs both : risk reduction mechanisms and risk sharing. as i just said, for crisis prevention to be credible, we should implement fiscal discipline – including the present rules of the stability and growth pact – but we should also have the instruments needed to cushion the effects of asymmetric shocks that may arise suddenly, regardless of all the efforts a member state can make. it is time to forget about ideological trench warfare. let me share with you four areas where practical progress is needed : first, bolstering private risk sharing. the simple and obvious way to achieve this is to build the capital markets union within the financing union that i mentioned earlier. we are still lagging far behind the united states where capital markets are capable of absorbing around 40 % of a state - specific shock. what is more, a genuine financing union would further 2 / 3 bis central bankers'speeches increase the efficiency of monetary policy by ensuring better circulation of liquidity in the euro area. second, edis. we have made significant strides with the first two pillars of the banking union, the single supervisory mechanism ( ssm ) and the single resolution mechanism ( srm ). we still need – and it should be our priority – to strengthen the srm with a sovereign backstop to the single resolution fund and a simplified decision - making process tailored for emergency cases of resolution. now, there needs to be some form of compromise to move forward on the third pillar, edis, as well. a suitable and pragmatic approach could be a first step focused on providing the liquidity needs of the national deposit guarantee schemes, as proposed by the european commission last october. we don ’ t need from the start an integrated european guarantee. third, sovereign debt restructuring. it is legitimate and important to ask ourselves how to make the euro area better able to withstand sovereign debt crises in case they happen. in this regard, enhancing market discipline can be part of the solution – the proposals to set up a sovereign debt restructuring mechanism build on this idea. however, we have to be very cautious and make sure that it does not become part of the problem. when rules are rigid, market expectations may prompt sudden chain reactions or speculative attacks and put financial stability at risk. and nobody should underestimate the “ transition problem ” on the existing debts if such a policy were to be announced. fourth, the institutional architecture of the euro area. if we make progress on the substance ( the three instruments i mentioned ), there is a

privatisation. these efforts are obviously painful and require public support, but they are the only way for greece to get back on its feet. dealing with the underlying problems in addition to tackling the urgent issues stemming from the successive crises, it has been absolutely necessary for each country to implement all the efforts needed to restore them to a sound fiscal path. from my point of view, all countries have taken their responsibilities to do so. their credibility is now at stake and they must be committed to bringing their public finances back into balance as soon as possible. moreover, the euro area has considerably enhanced its fiscal discipline framework : national budgets have become subject to european commission monitoring, sanctions are more automatic, and early warning mechanism more appropriate. a new framework for surveillance of macroeconomic imbalances and competitiveness developments has also been put in place. i now wish to recall two points. first, excessive public debt is not solely a european problem. the sovereign credit rating of the united states was downgraded last summer and its fiscal policy framework does not appear to be much more simple or rapid than that of the euro area. second, in aggregate terms, the euro area ’ s government deficit is one of the “ least bad ” of developed countries. it is expected to stand at around 4. 5 % at end - 2011 whereas those of the united states and the united kingdom are double for example. naturally, this is not a reason to slow down reforms, quite the opposite. but it shows that our situation is not as bleak as some market developments might suggest. measures taken by the g20 in response to the crisis we have seen that there is a close link between the us episode that started in 2007 and the european episode. this clearly shows that the different regions of the world are facing common challenges and that the solutions must be shared. to this end, the g20 has grown in prominence since 2008, and has already made significant changes. the french presidency of the g20 came to an end with the cannes summit in early november. as you may have noticed, the greek situation grabbed the limelight meaning that the major advances made this year may not have received all the consideration they deserved. i would therefore like to finish my talk by recalling some of these advances : – first, the g20, the fsb and the basel committee, continued their work on the reform of the international financial regulatory system underway since 2009, in particular regarding systemically important institutions ; – second, the g20 finished its