of bank business models, cost inefficiencies, overcapacity and still - large stocks of npls for parts of the euro area banking sector. first and foremost, it is up to the banks themselves to undertake the needed adjustment. but an effective reduction of npls will require action from all stakeholders, and will need to include legal and institutional reforms. in particular, active policies are needed to improve the efficiency of judicial systems, increase access to collateral, introduce swift out - of - court procedures and create liquid markets for distressed debt. last month the ecb published its final guidance to banks on npls. furthermore, it is crucial to complete the global regulatory reform agenda as soon as possible in order to significantly strengthen the regulatory framework for banks and ensure a period of regulatory stability and certainty for market participants. while the economic recovery in the euro area is firming, the reform process needs to be reinvigorated to transform the cyclical pick - up into stronger and persistent long - term growth. to that end, structural reforms have to be implemented much more decisively, including reforms addressing key institutional weaknesses and improving private debt workout mechanisms which are necessary to improve the investment environment. in many cases, these reforms entail fairly low short - term economic cost. given that national reform efforts remain limited in euro area countries, it is also important to foster the use of existing tools, most notably a full and consistent application of the eu ’ s macroeconomic imbalance procedure. likewise, full and consistent implementation of the stability and growth pact remains crucial to ensure confidence in the eu ’ s fiscal framework and to safeguard public debt sustainability. in the current environment of a firming economic recovery, a broadly neutral euro area fiscal stance strikes an appropriate balance between aggregate stabilisation and sustainability needs. however, the contribution of individual member states to the area - wide stance is sub - optimal. some member states need to take additional measures to ensure compliance with the fiscal rules while others have scope to use available fiscal space. all euro area countries should strive for a more growth - friendly composition of fiscal policies. more broadly, a stronger and more complete economic and monetary union ( emu ) is essential to ensuring the future resilience of the euro area economy. the european commission started a general reflection on the future of the eu by publishing a white paper last month, which will be followed by a paper on emu in may 2017. we need to make progress on completing the banking union by moving forwards in

benoit cœure : exchange of views on the ecb ’ s role in the troika remarks by mr benoit cœure, member of the executive board of the ecb, before the economic and monetary affairs committee, brussels, 13 february 2014. * * * madam chair, honourable members, let me first of all thank you for your invitation to this exchange of views. the adjustment programmes implemented in recent years in several euro area member states were an unprecedented answer to an unprecedented crisis. this crisis has affected the lives of millions of eu citizens – hence it is only natural that you, as their directly elected representatives, assess what has happened. this crisis has revealed major shortcomings, mainly in domestic economic policies, but also in the architecture of emu – thus the european parliament as an institution with a truly european perspective is an appropriate forum to discuss what can be learnt from this experience. it is against this background that i am grateful for the opportunity today to explain the role of the ecb in the troika, to discuss our assessment of the adjustment process in the programme countries and to draw with you some key lessons from the last four years. the ecb ’ s role in the troika let me start by recalling the circumstances under which the troika was set up. when a sovereign debt crisis erupted in spring 2010 in the aftermath of an unprecedented global financial crisis, the euro area was caught unprepared. the maastricht architecture had failed to prevent the build - up of excessive imbalances and unsustainable fiscal positions by a number of countries. europe was then ill - equipped to handle a crisis of such magnitude stemming from these developments. there was no framework for dealing with member states losing market access. there was no governance foreseen for such cases. there was no instrument to provide funding. under these difficult circumstances, the member states decided to grant financial assistance subject to appropriate conditionality as part of an adjustment programme. the eurogroup sought to avail itself of the best available expertise to support it in designing and reviewing these programmes. the imf and the european commission in liaison with the ecb with their complementary experience in crisis management, country surveillance and financial stability were asked to take on this difficult task – this is what we know today as the troika. the particular expertise and euro area focus of the ecb, in other words, the views we have on the systemic consequences of the decisions under discussion, were compelling reasons for