). such a programme must entail conditionality that ensures fiscal discipline. with fiscal discipline, monetary policy cannot become captured by fiscal dominance. and therefore, the central bank can continue its pursuit of safeguarding price stability in full independence. and there is one more important lesson from 2012 that we must keep in mind : measures to stabilise the euro area, particularly the omts, are not only essential for price stability. they also reduce target2 balances and, because they foster the cohesion of the euro area, they reduce possible risks for german taxpayers. to sum up, the facts support an ultimately more confident review of 2012. prospects for 2013 as regards the coming year, i would like to suggest three things we need to focus on in 2013 : first of all, we need perseverance. despite the good progress so far showing that adjustment is happening, reform efforts need to be sustained. adjustment is inherently difficult and will remain with us for some time to come. politicians and their populations will need to persevere, especially on structural reforms that improve competitiveness. countries need competitiveness to sustain growth. they must move away from debt - financing. there is no possibility of sustained growth based on permanent debt accumulation ; and by the way, there is no social fairness based on permanent debt accumulation. second, we need continued ambition. relative calm in financial markets should not lead to a lowering of our ambitions to fix the structural flaws in the governance framework of the euro area. after the many advances that have been made in creating new rules and institutions, this coming year should focus on implementation. third, we need patience. i am very well aware that for many people in the countries under adjustment, the personal economic situation can be very difficult. but there is simply no alternative to the path of reform. the crisis has several facets that are of different importance in different countries : there is a debt crisis that needs fiscal consolidation ; there is a competitiveness crisis that needs bis central bankers ’ speeches structural reforms ; there is a banking crisis that needs a strong financial union ; and there is a confidence crisis that needs strong commitment by all policy - makers, including by the central bank expressed through our programme of omts. the social consensus behind the reforms will need to be maintained. these reforms are not undertaken to please brussels or frankfurt or washington but for the deep self - interest of the economies concerned and of the whole euro area. they will make the economies function better, more efficiently and, yes,

a sizeable allocation of credit to highly - leveraged corporates. 5 / 11 bis central bankers'speeches i n china, the total leverage in the system is about 300 % of gdp, with high levels of indebtedness among local governments, state - owned enterprises, and households. in asia, there has been a surge in the issuance of foreign currency bonds, denominated mainly in us dollars and concentrated in the real estate sector. high leverage in itself does not suggest an impending financial crisis but, if coupled with a sudden shift in investor sentiment, can lead to financial instability. the potential triggers for such a sudden shift in investor sentiment are not hard to find – escalation of trade tensions, disorderly brexit, sharp slowdown in china, or unexpected tightening of financial conditions. in asia, the key risk is an abrupt reversal of portfolio flows and consequent stresses on indebted corporates with large foreign currency liabilities. singapore ’ s financial system, corporate and household fundamentals remain sound. mas ’ most recent stress tests indicate that our financial system is resilient to an adverse scenario of a severe global downturn as a fallout from rising trade tensions. that said, continued vigilance is warranted. some households and corporates could face pressures on their cash flows and hence debt servicing ability if the economy slows more than expected. property market and macroprudential policy last july, the government took macroprudential measures to cool a property market that was showing early signs of potential over - heating. in less than one year, between q3 2017 and q2 2018, private residential prices had surged by 9 %, offsetting most of the gradual decline of 12 % over the preceding four years since q3 2013. there was a real possibility that property price increases would once again run ahead of economic fundamentals – as they did in the lead - up to 2013. if a renewed property bubble were to form, it would risk a destabilising correction later that would hurt households, businesses, and the banks. this risk was especially pertinent, given the strong pipeline of private housing supply coming on stream over the next few years. this is why, mnd, mof and mas decided to act early and decisively to restrain the property market. we have learnt from experience that preventing a bubble from forming is less painful than deflating one that has fully formed. the measures implemented last year have helped to moderate the property