some time. after all, the sovereign debt crisis was not least the result of a slow but steady loss of price competitiveness in some countries in the euro area. the loss of competitiveness went hand in hand with a build - up of excessive foreign indebtedness – partly due to high public deficits and partly due to high deficits in the private sector. 1 / 5 bis central bankers'speeches when the markets began to doubt that these debts could be repaid, they pulled the plug. some countries in the euro area were effectively shut off from the capital markets. in countries where the reason for the sudden stop was not already a fiscal crisis, it soon became one as sovereigns struggled to rescue their banking systems. to regain the trust of the markets, the affected countries had to undertake reforms to regain competitiveness. but regaining competitiveness takes time. time that these countries did not have. the situation was calmed down after the member states of the euro area hastily tailored a rescue fund which has now become a permanent institution, the european stability mechanism. the euro system – i. e. the ecb and the national central banks of the 19 member states of the euro area – also needed to take measures to prevent the crisis from escalating. these included targeted purchases of bonds from member states with poor credit ratings. some of these measures not only proved controversial within the ecb governing council, but also raised a number of fundamental questions about the limits of monetary policy. these emergency measures bought the countries time to restore their competitiveness and to consolidate their public finances. most of the former crisis countries have indeed managed to reduce or even eliminate their current account deficits. but the wage restraint that was necessary to improve price competitiveness together with the ongoing efforts to consolidate public finances have dampened growth and price pressures in the euro area. this is one of the reasons why the recovery after the financial crisis took somewhat longer in the euro area than in other advanced economies, such as the united states and the united kingdom. but for some time now, the recovery in the euro area has become increasingly robust and broadbased. real gdp has been growing now for 16 quarters. and what is probably equally important, almost all countries are sharing in the recovery. there has recently been an improvement in growth in france, italy and spain, for example. this means that growth in the large euro area countries is no longer diverging. the economic outlook has improved, too. the european central bank, for example

, gross public sector debt ranges from four percent of gdp ( luxembourg ) to 100 percent of gdp ( belgium, italy ). heterogeneity is a fact of life in the euro area. but homogeneity far outweighs heterogeneity in one crucial respect : we are united by our intention to form an integrated europe with a common market as a strong and reliable partner for the world economy. iii in addition, our monetary union is built on a host of common values and interests. the euro - area countries share a firm stability orientation. it is reflected in the institutional framework of the european monetary union. the european system of central banks is a two - tier system. it consists of the national central banks and the european central bank, the ecb. both the ecb and the national central banks are independent from any political interference. monetary policy decisions are taken by the ecb governing council, which consists of the six - strong ecb executive board and the governors of the participating national central banks. the vote of very single board member or governor carries the same weight notwithstanding the size of population of his home country. the rule is " one person, one vote ". unlike the centralized decision - making, the implementation of the single monetary policy is decentralized. national central banks provide the markets with liquidity, in accordance with the decisions of the ecb governing council. the primary objective of the european system of central banks is to maintain price stability. the ecb governing council defines price stability as an increase in consumer prices ( measured in terms of the harmonized index of consumer prices ) of less than two percent a year. the ecb governing council has opted for a two - pillar strategy to analyze prospective price movements over the medium term. in pillar one, the growth of a broad monetary aggregate is analyzed. this pillar takes account of the fact that, over the medium or longer term, inflation is always a monetary phenomenon. in pillar two, a wide range of other economic and financial variables indicating potential future price effects, are closely analyzed. the two - pillar strategy makes for a broad assessment of the potential risks to future price stability. the second stability - ensuring institutional feature of emu – besides the escb – is the stability and growth pact. it spells out how member states are supposed to ensure sound public finances, as the treaty obliges them to avoid excessive deficits. wage policy is another national responsibility. in the most recent years, wage agreements have