given that the eurosystem has bought time for national action, i don ’ t think that bringing to mind the pledges that were made to embrace consolidation and structural reforms constitutes meddling in national affairs. in the euro area, we share a common currency, which means that a lack of reform in one country has implications for the euro area as a whole and for the stability of our monetary union. while adjustment has to happen primarily in the deficit countries, countries running a current account surplus, such as germany, face challenges as well, as i have outlined before. last sunday ’ s victory in the football world cup should not blind us to reality, either. as gideon rachman wrote in a financial times comment : “ germany is undoubtedly going through a golden moment – on and off the football - field – but there are reasons for fearing that it will prove all too momentary. ” in any case, deliberately weakening the competitiveness of germany ’ s export sector would harm, rather than benefit, the stressed countries ’ economies. we should bear in mind that german exports contain imported intermediate inputs from other euro - area countries amounting to 9 % of the overall added value. if germany were to accept the economic advice to excessively boost its wages in order to stimulate domestic demand, it would harm employment in germany and, as a consequence, the economic situation in the entire euro area as simulation results show. bis central bankers ’ speeches despite this, it is clear that against the background of germany ’ s strong cyclical position and the tight labour market, wages will rise faster than in the rest of the euro area. we expect effective wages to rise more than 3 % this year and next year. strengthening emu ’ s institutional architecture however, when it comes to taking action at the european level, the challenges facing monetary union are also considerable. the safeguards originally put in place for the stability of monetary union, the stability and growth pact and the no bail - out clause, failed to prevent the crisis. as i have already pointed out, there are additional macroeconomic imbalances which likewise pose a threat to the stability of the euro area : a steady loss of competitiveness, persistent current account deficits and high levels of private debt. measures to address these deficiencies, such as the strengthened stability and growth pact, the fiscal compact and macroeconomic surveillance, have been implemented. i will come back to this in a minute. ultimately, the risk of contagion between countries was also underestimated when

it is not yet clear whether the new rules do really bite. strict and consistent application of the stiffened rules is therefore important. here, the commission has a special responsibility. metaphorically speaking, we need to make sure that the commission does not go beyond its role as a referee and move the goalposts mid - game. in this regard, some doubts are warranted, as is evident from the recent debate surrounding a flexible interpretation of the stability and growth pact. the pact, which was reformed less than three years ago, grants a great deal of discretionary scope. moreover, there is a risk that recent decisions by the european council will provide even more of a pretext for lax interpretation. however, an excessively generous interpretation of this leeway would certainly undermine the credibility of the stability and growth pact. it was only last week when mario draghi warned : “ to unwind the consolidation that has been achieved, and in doing so to divest the rules of credibility, would be self - defeating for all countries. ” and let us not forget : in the medium term, the pact stipulates balanced or close to balance budgets. the 3 % mark that is frequently used as a yardstick is therefore a ceiling and not intended to be a regular target. this is, incidentally, also true of the 60 % debt ratio that almost all euro countries breach. a look in the rear - view mirror shows how poorly the fiscal rules have worked as a speed limit. since the introduction of the euro, the economically important member states of france and italy have exceeded the upper public deficit limit of 3 % of gdp in nine out of 15 years. germany, meanwhile, has had seven “ entries in the class register ”. and as for 2014, we expect six out of 18 countries to exceed the limit. in the long run, consolidation does not inhibit growth ; rather, it is a precondition for sustainable growth. more debt is not a prerequisite for successful structural reform. quite the opposite is true : sound public finances are a crucial element of a successful reform strategy. any attempt to trade off reforms against higher structural deficits would pave the way for budgetary arbitrariness, undermining the credibility of the rules. judging by past experience, it is clear to me that it will take more than simply stiffening the rules to enforce the principle of individual responsibility. essentially, this principle requires sovereigns, banks and investors to bear the consequences of their decisions. ju