specific 2 / 7 bis central bankers'speeches shocks will be distributed more evenly across the currency area. equity capital, in particular, makes an excellent buffer, as the alternative forms of financing – bonds and loans – have to be serviced in full even in economically difficult times. because of this, if nothing else, i consider the creation of a european capital markets union to be an enormously important project. if politicians nonetheless opt for increased fiscal risk - sharing, i believe sovereignty rights would have to be surrendered in exchange. after all, joint liability must come with the option of codetermination. otherwise, there would be the risk of misguided incentives. i don ’ t need to explain the practical relevance and occasional topicality of this connection to listeners from member states with a federal structure such as austria and germany. it would be a false signal, which would threaten to discredit the proposed european risk - sharing mechanism from the outset, to now mutualise risks that arose under national responsibility. that ’ s why, ahead of any fiscal backstop for the single resolution fund or a common deposit protection scheme, it ’ s important that we first make significant progress in getting rid of legacy risks. legacy risks include the outstanding stocks of non - performing loans on banks ’ balance sheets, especially those not covered by loan loss provisions. on average, it would appear that european banks have done little to significantly increase their coverage ratio for losses arising from nonperforming loans over the years. it ’ s also worth taking a closer look at the overall stock of nonperforming loans. while the average non - performing loan ratio has fallen by around one - third in europe since 2014, there are two things to bear in mind. first, we are observing a decline from the very high level recorded in the post - crisis years – compared with pre - crisis levels, we still have some way to go. for instance, the average non - performing loan ratios of six euro area countries remain in double - digit territory. to put that into proportion, the share of non - performing loans in the united states and japan stood at around 1. 5 % in 2016. second, individual member states are the driving force behind much of the risk reduction achieved so far. for example, ireland and spain have been able to significantly shrink their high stocks of non - performing loans. by contrast, other countries ’ high ratios have remained all but unchanged. in other words, we have yet to find a solution to the fundamental

axel a weber : challenges and opportunities for the competitiveness of emu member states. the euro in the financial crisis – the german experience presentation by professor axel a weber, president of the deutsche bundesbank, at the copenhagen business school, copenhagen, 22 march 2010. * * * introduction dear president johann ross ( copenhagen business school ), dear professor peter birch sørensen ( chairman of the economic council, denmark ), dear gouverneur christian noyer and governor niels bernstein, ladies and gentlemen the global financial crisis that we have been experiencing since the autumn of 2007 has been a challenge for monetary and fiscal policy in nearly all industrialised countries. in addition, it called our regulatory regimes into question and caused a profound reform process to be initiated at the national, european and global level. with respect to european monetary union ( emu ) the financial crisis has made clear just how important the euro is as a stabilising factor for the economies of its member states. nonetheless, the challenges that lie ahead after the financial crisis and the economic downturn that accompanied it have not diminished. in particular, the financial crisis has led to a renewed debate about perceived imbalances in the euro area. this discussion is not new, as divergencies have been building up steadily since the launch of the euro. however, during the years preceding the financial crisis, the strong global economic expansion and the ongoing economic integration within the euro area partly masked the problems arising from these differential developments. as the financial crisis has called unsustainable business models into question and ruthlessly revealed the structural nature of the disparities, they have now moved centre stage. taking the specific adjustment processes in a monetary union into account, we have to think about the conditions for sustainable growth in all euroarea economies and about how they can be achieved. in my following remarks, i will address these two aspects of the recent experiences within the euro area. first, the advantages of monetary union during the financial crisis. second, the challenges that will have to be overcome in order to resolve the divergencies that have built up within the euro area. the current debate focuses on the differences in price competitiveness between emu member states. however, in my view losses in competitiveness are not the root of the problem but rather a symptom of underlying unsustainable structural developments in some member states. accordingly, the marked gains in price competitiveness the german economy has experienced have been a result of necessary structural