low carbon economy ; third, the completion of the financial union ; and fourth, institutional reforms in the governance of the economic pillar of the economic and monetary union. technological progress, product and process innovations are key drivers to long - term growth as recalled by professor christopher pissarides in his presentation at the sintra ecb forum on central banking, 6 who stated that europe as a whole was not doing very well in this field, although there were exceptions. ibid. let us note that the current accommodative monetary policy and its effectiveness should not be used as an excuse to delay necessary structural reforms. “ structural perspectives on european employment : the role of innovation and growth ”, sir christopher pissarides, professor, london school of economics and university of cyprus, paper presented at the ecb forum on central banking, sintra, 22 may 2015. bis central bankers ’ speeches this points to the need to improve the ecosystem of innovation throughout the different stages, from basic research to successful market applications. there is still a too broad and deep death valley along this process. second, the transition to a low carbon and more resilient economy represents another key challenge in this respect. this is a global problem. europe is, however, a key player in this field, as the forthcoming united nations climate change conference in paris demonstrates. climate preservation is not only a necessity but also, as continuously stressed for example by nicholas stern, 7 an opportunity for the enhancement of the co - evolution of growth and structural change. third, the financial union has also a strong potential to support future growth. the banking union has to be completed and the capital markets union has to be launched successfully. you will discuss that in detail over the next days. allow me only to touch on one specific element, which by the way was considered important enough by “ the economist ” for a cover story some months ago, with the title “ the great distortion – a dangerous flaw at the heart of the world economy ”, 8 namely the difference in taxation between debt and equity. this point has also briefly been touched upon in the comprehensive eurosystem contribution to the commission ’ s green paper on building a capital markets union. let me quote part of the relevant paragraph : “ initiatives in taxation should aim to reduce the preferential treatment of debt financing as opposed to equity financing … this can facilitate a greater reliance by firms on equity and have a positive impact on their access to other forms of finance. it could also be important to re

participated, presented several additional “ new ideas ” in this context. most recently the discussion focussed on ricardo caballero ’ s analysis of the “ surprising ” nature of the recent crisis. he stressed that the “ surprise ” was not the decline in property prices, but the repercussions this had in the financial sector. the unexpected departure from the normal functioning of the financial system plunged agents into unquantifiable uncertainty. this unleashed panic, characterised by a “ flight to safety ” and fire asset sales that amplified the crisis. at this point, the role of the authorities is to fight the panic, which involves providing some form of insurance. in the 2008 conference, anil kashyap and his co - authors suggested that capital insurance could be provided by the private sector, while in 2009 caballero argued that only the state can insure against systemic risk. necessarily, any insurance arrangement is contingent, so it may share some of the features of contingent convertible bonds. however, if all banks were required to contribute to a common insurance pool, the risk coverage would be spread more broadly than if the scheme is limited to the “ too - big - to - fail ” banks. caballero proposed tradable insurance credits ( tics ) that institutions could attach to individual assets or liabilities on their balance sheets. since tics could be traded between banks, they would allow insurance coverage to flow to where it is needed in a crisis, without the authorities needing to specify in advance the nature of the contingent event to be covered. banks that find themselves less exposed in a crisis could choose to sell their insurance to distressed banks at a premium, a reward for prudence that most insurance schemes do not offer. i find some of these features attractive, but any insurance scheme is also subject to important limitations. private insurance schemes require freezing huge amounts of resources to cover the insurance promises. the failure of some mono - line insurers in the recent crisis indicates that private sector resources can turn out to be insufficient, aggravating financial instability. on the other hand, public sector insurance schemes jeopardise the sustainability of public finances as they transfer the risks to the taxpayer and distort incentives as mentioned above. 3. conclusion let me conclude. financial crises are an inevitable part of the business cycle. it would be misguided to expect to eliminate them completely. however, we do have a responsibility to learn from them in order to reduce the inefficiencies in