implementation. and as i have just argued, the current approach to crisis management has not helped to remedy this. against this backdrop, it might be consoling to take a look at the german experience because it illustrates how reforms eventually pay off. 4. the german experience in the first half of the 1990s, the price competitiveness of the german economy declined dramatically because a number of domestic imbalances had built up during reunification. among these were an oversized construction sector and strong wage and price increases despite a decline in average labour productivity. on top of this, the deutsche mark appreciated strongly. the loss of competitiveness put germany in an extremely unfavourable position on international markets. consequently, the corporate sector responded with a painful, but eventually successful, restructuring process which included innovation, outsourcing, wage moderation and a balance sheet clean - up. the german government was also forced to act. just after the turn of the millennium, the burst of the “ new economy ” bubble caused an economic downturn and led to a protracted period of meagre gdp growth : unemployment was persistently high while overburdened social security systems led to big fiscal deficits. in 2003, bold labour market reforms were introduced. these reforms were accompanied by fiscal consolidation and adjustments in the social security systems, in particular the pension system. in any case, the reforms put germany in a position to cope comparatively well with the crisis. although it was hit rather hard when the world economy went into recession, the labour market proved to be quite resilient and private consumption remained robust at the height of bis central bankers ’ speeches the financial crisis. thus, germany could serve as an anchor of stability for monetary union. for this to remain the case, it would be advisable to now stick to the original plans to consolidate the budget. consequently, the recently envisaged tax cuts would have to be counter financed, for example by cutbacks in tax expenditure. leaving these current events aside, the question that remains is : can other countries learn something from the german experience? i believe it provides a very simple and straightforward lesson that could be summarised by something the famous german author erich kastner once said : “ es gibt nichts gutes außer man tut es ” or in english : “ actions speak louder than words ”. at the last summit of eu leaders, promising reforms were announced by several countries – now they have to be implemented. 5. conclusion ladies

sovereignty to the european level – at least temporarily. only a clear decision for either of the two options lays the bis central bankers ’ speeches foundation to preserve monetary union as a stability union in the long run and to safeguard its role in the global economy. it is up to governments in europe to make this decision. hence, i welcome the german government ’ s attempts to press for greater political integration, including transfers of national responsibilities. let me be clear : it will be a lengthy and arduous process requiring important legal changes. however, a credible commitment to this process could have beneficial effects right away. however, so far there is no consensus on this, and so an “ in - between approach ” is being pursued. national fiscal policies are still decided at the national level while the resulting costs are borne by all member states. this approach lacks credibility because of its inconsistency. the lack of success in containing the crisis does not justify overstretching the mandate of the central bank and making it responsible for solving the crisis. however, a clear commitment to our mandate is an indispensable element of a prosperous future for the euro. it was only for this purpose that the eurosystem was granted independence and this independence is not only a right but an obligation. i am convinced that the current crisis of confidence can not be overcome if trust in the legal and economic framework is lost. i am also convinced that the economic costs of any form of monetary financing of public debts and deficits outweigh its benefits so clearly that it will not help to stabilise the current situation in any sustainable way. apart from the institutional framework of monetary union, the second aspect that has to be addressed is structural deficiencies in a number of member states. these deficiencies include a lack of competitiveness, rigid labour markets and the failure to seize opportunities for growth. solving the crisis also requires addressing these deficiencies : the labour markets in the relevant countries have to be reformed and made more accessible to a larger share of the population ; the efficiency of administration has to be increased in many areas ; opportunities for new businesses have to be created by facilitating the access to domestic markets for goods and services. undertaking the necessary reforms is not only indispensible to overcome the sovereign debt crisis, it would also help to benefit from globalisation and the “ big shift ”. to sum up : the necessary measures are obvious and uncontested. the only thing that we are short of seems to be their