commitment device ( think of ulysses and the sirens, alexander or cortez burning their boats, or medieval rulers exchanging hostages as an earnest of peace ), the emu should have functioned very well indeed. debt, competitiveness and balance of payments problems were always going to be harder to fix if they emerged in a euro area country. perhaps that was not fully and constantly brought home to decision - makers. instead, they seem to have assumed that all problems of macroeconomic imbalance would automatically be self - correcting in the new environment. for example, by removing the possibility of devaluation, membership of the euro ensures that any country which allows its competitiveness to get out of line will ultimately suffer a costly period of adjustment likely associated with unemployment. it was always going to be much more difficult and more painful to readjust aggregate competitiveness. did that stop countries from losing competitiveness : no! [ chart 6 ]. indeed, wide discrepancies in competitiveness quickly opened - up and became progressively worse until 2007. where one might have expected the financial markets to enforce discipline, they did not always do so. in particular, a market understanding that there really was going to be no bailing - out from the rest of the union of national governments that got into trouble, no transfer union, should have implied that market investors would penalise countries heavily for accumulating debt at an excessive rate. some market participants did recognise the existence of differential credit risks. let me return to the chart which i showed on ratings and yields [ chart 5 ]. the much maligned credit rating agencies did distinguish between euro area sovereigns – albeit only in a relatively narrow range that extended down to a ( for greece ). but the range of market yields on government debt did not reflect even this range of credit assessments : in effect real money must have assumed that governments would be bailed out, despite the “ no transfer union ” dogma. accordingly some governments were able to spend and borrow without seeing the cost of funds move up against them ( though admittedly, bis central bankers ’ speeches the accumulation of excessive debt before the crisis was not as large as is sometimes carelessly asserted. ) ( note that the markets were wrong : they did eventually lose significantly on greek debt ). the rapid expansion in cross - border borrowing and lending in the euro area unrelated to governments was a phenomenon driven as much by global financial liberalisation as by the existence of the euro. it led to a huge accumulation of banking

is changing rapidly, driven by technological change and by consumer preferences. the ways in which we as consumers buy, use and engage with financial services has changed hugely, leading to new risks in the financial sector we supervise and for the consumers we protect. 2 / 4 bis - central bankers'speeches as outlined in my two recent letters to yourselves, the central bank is making changes to the way we are organised to deliver our financial regulation responsibilities. consumer protection remains a core part of those responsibilities. but in order to continue to deliver on our mandate both today and into the future, we are changing our approach to ensure that consumers of financial services are protected in an increasingly complex environment. this enhanced approach is based on accumulated experience, on insight, on best practice and is built for a faster moving and more complex financial services sector. we are making the most fundamental strengthening of our consumer protection approach for more than a decade. in terms of frameworks, as you know, we will shortly be introducing an updated consumer protection code. this follows the largest, most in - depth review of the code since it was introduced to ensure that it is fit for purpose into the future, is reflective of the changed nature of financial services and strengthens protections for consumers. this is a tangible demonstration of our ongoing commitment to the protection of consumers of financial services right across the country, and we have consulted widely on it to ensure we hear consumers'and other stakeholders'views directly. to implement the rules we need the right operational approach internally. this includes moving to an integrated framework where, at an operational level, directorates with oversight of banks, insurance companies and capital markets will be responsible for the supervision of all the functions of their respective sectors ( as opposed to separate directorates undertaking supervisory activities for consumer protection, prudential regulation and market supervision ). the new approach will make it easier to direct our supervisory resources to the areas of most risk to consumers or the system more widely. importantly, we are taking the existing team that stood in a single consumer protection directorate and placing them where their expertise is most required, directly in supervisory directorates across banks, insurance and funds.'mainstreaming'consumer protection activity in this way will enable us to dedicate greater attention and resources to where the particular risk is at a point in time. the new approach will allow us to do more, not less, to protect consumers. let me give an example of how we see the interconnections in our work in relation to consumer protection.