shown the benefits of belonging to a strong and stable currency area. as a consequence, the current crisis has led to a radical reassessment of the desirability of joining the euro on the part of policymakers, financial market participants, and citizens in several countries outside the euro area. the recent crisis has clearly shown the fundamental role played by central banks in crisis management, through the provision and management of liquidity in the money markets and – in some exceptional cases – by providing emergency liquidity to individual institutions. in this respect, the ecb ’ s money market operations have consistently been based on the fundamental principle of separation of the monetary policy stance from liquidity management. the former is determined in the light of the primary objective of maintaining price stability over the medium term. the latter ’ s goal, on the other hand, is minimising financial stability risks, and ensuring the orderly functioning of money markets. the provision of unlimited liquidity to the euro area banking system on the part of the ecb, against an expanded array of eligible collateral since mid - october, should effectively eliminate concerns about liquidity risk, and should therefore further reduce pressures in the money markets. central banks ’ actions, however, can only go so far, as they cannot tackle some of the underlying causes of tensions on the money markets, first and foremost concerns about counterparty credit risk, and the continuing uncertainty on banks ’ other funding sources and capital positions. in this respect, the measures taken by the governments and shareholders are, therefore of paramount importance, and should address these problems over time. moreover, it is key to ensure that there is access to financing for all sectors of the economy, especially for small and medium sized enterprises, which cannot access the capital market so easily. 4. concluding remarks i would like to conclude by recalling some important points which ought to be kept in mind in order to reinforce the strength and resilience of the euro area economy, thus contributing to preserve and consolidate the remarkable success of the euro. first and foremost is the need to proceed along the path of structural reforms, with the firm implementation of the lisbon strategy, as refocused and reinforced by the eu council. this is crucial to increase the euro area ’ s growth potential, foster job creation, and increase the resilience of the economy in the face of shocks. a second key issue is the need to regularly monitor developments in unit labour costs across euro area countries. in particular, in those countries which have witnessed size

resolution fund for the supervised banks, is just as important as the single supervisory mechanism itself. the european commission has presented a legislative proposal under which this mechanism could become fully operational as of 2015. i ’ m greatly in favour of this ambitious schedule, which does justice to the urgency of the project. bis central bankers ’ speeches the ecb will shortly publish an opinion on the commission ’ s proposal. without wishing to anticipate this detailed analysis, i would like to share a few thoughts with you on a good way of designing this mechanism. the proposal covers the core elements required to resolve failing banks efficiently, whilst minimising costs for taxpayers and the real economy : a single system with a single authority and a single bank resolution fund. it is right and important that resolution decisions will be taken at european level, i. e. at the same level at which supervision will be exercised in future. quick and efficient decisions will enable the closure of credit institutions that are no longer viable – without impairing the stability of the rest of the financial system. but who will actually decide that a bank is no longer viable? in answering this question i see that the current proposal still needs to be improved. in my view, such a decision should be made solely by the banking supervisor, i. e. in future by the ecb. this would allow for rapid, coordinated decisions, and subsequent action, without unnecessary disputes about competencies. once the decision has been made that a bank is no longer viable, the resolution authority could take over. it would then decide how to carry out the resolution in that particular case. such a clear division of tasks makes good sense. let me add, however, that the resolution fund will be financed through contributions from the banking sector. moreover, when banking supervision and resolution are brought to the european level, a single european deposit guarantee scheme will be less urgent. because thanks to the pecking order laid down in the bank resolution and recovery directive, less funds will be required for the compensation of depositors in extreme cases. for one, the framework for the recovery and resolution of banks, that is due to be adopted shortly, provides that depositors will be treated favourably. so the need to compensate depositors will more rarely arise. that means that national deposit guarantee schemes will only need to be invoked in absolutely extreme cases. in addition, the revision of the directive on deposit guarantee schemes aims to harmonise national deposit guarantee schemes and to provide them with more resources. both aspects