collective wealth should be manageable. o but we should still do our homework on the “ who will pay? ” part of the question. this requires a granular and realistic understanding of the costs per sector, but also of other political and technical constraints. think about gas boilers in germany... as i am about to close, i must mention the elephant in the room : geopolitics. everyone understands that global warming is … well, global ; and that the eu emits only a small fraction of greenhouse gas. so, the question of who will pay is as much about the different groups in our societies, as it is about other countries around the world, especially the us and china. in the old world of rules - based international relations, a reasonable hope would have been that international policy coordination could provide a satisfactory solution. however, the recent cops have dashed my hopes. i will not risk my reputation anticipating what the outcome of the strategic interactions between the 3 big players might be. i will only share a few worries and unanswered questions. • first, i am worried about the faith one seems to be putting in the carbon border adjustment mechanism and in industrial policies of all breeds. as i already mentioned, energy prices in europe put us at a serious disadvantage compared to the us, which have access to cheap energy, do not intend to tax carbon, and have opted to subsidize clean energy. while we could expect a cheaper euro to correct for part of europe ’ s competitiveness gap with the us, a weak currency is not a permanent solution. • second, although europe probably never was the most innovative economy, it was good at incremental technological progress, but much less at the disruptive type, which is becoming more important. besides, looking beyond quantum, superior quality is often associated with our continent : the quality of the products we make, but more broadly, the better quality of life and greater social equity we achieve given a lower gdp per capita than the us. i would nevertheless caution against the sense of complacency that might come out of this line of thinking. permanently trailing our competitors will ultimately undermine our welfare. that will not be acceptable to the people. • third, in the great power game now underway, europe ’ s traditional foreign policy doctrine comes under stress. while eu countries operate well in the safe environment of rules - based international relations cemented by international organizations and strong transatlantic ties, it seems to be less effective in establishing

encouraged excessive leverage and risk taking and excessive concentration of exposures among major financial institutions ”. the insistence on the words “ insufficient ”, “ inadequate ” and “ excessive ” shows that, in particular, more and better buffers are expected. the crisis has given rise to a unique momentum for profound reform of the financial sector. we should not let this momentum slip away. i know full well that the return to more simplicity will be anything but simple. of course, i realise that a lot of technical issues have still to be resolved. and i admit that it will be important to introduce the new regulations in a timely manner so as not to repress the smooth flow of credit which will be required to support the nascent recovery. in fact, while there is much discussion at the moment on the design of the exit strategy from the public support measures, we should be equally aware of the need for an entry strategy for moving over to more comprehensive regulatory requirements. but all these considerations should not be an excuse for prevarication and delaying the essential decisions to take for the design of a more comprehensive framework. the crisis has seriously dented belief in the ability of the markets to regulate themselves. while it would be illusory to dispense with the assistance of the market in designing new supervisory and regulatory arrangements, these market consultations have more often that not been used by many financial institutions as a channel to lobby for softer regulation, certainly in the past and probably still today. the rapid spread of the financial crisis has also served as a lesson for supervisors. it has shown that the root of the problems was not linked to any specific difficulties faced by individual institutions but, rather, to the gradual build - up of common risks within the system. it is now widely acknowledged that such crystallisation of risk, linked to major shifts in the correlation between financial products and markets, requires more systemically - focused oversight and regulation. to use the professional jargon, micro - prudential control, the preserve of the supervisory authorities, must be complemented by macro - prudential oversight, resorting to the expertise of central banks. to improve the symbiosis between these two approaches, a growing number of countries are adopting the so - called “ twin peaks model ” where the central bank is in charge of the full range of prudential supervision, in both its micro - and macro dimension, leaving the oversight of market integrity and investor protection to a separate institution. just a few weeks ago,