, more ambitious capital requirements to absorb losses, improving coverage and reducing the risk of excessive borrowing. the countercyclical capital buffers are designed to reduce pro - cyclicality. at the same time, the supervision of financial institutions, financial markets and market infrastructure has been tightened, and the organisational structure of financial oversight has been overhauled. the european system risk board and the european supervisory authorities – the three new authorities created for the european banking sector, insurance and occupational pensions, and capital markets – have taken up their work at the beginning of this year. the esrb is in the process of developing the tools necessary to warn and, if appropriate, make recommendations as regards systemic risk. and the esas will allow closer monitoring of the interrelationships in the financial system of the european union. • but much remains to be done. most importantly, we need to ensure the full implementation of the envisioned reforms. in addition, key areas where work is still in progress – not only at the european, but also at global level – include : the treatment of systemically important financial institutions ; the mechanism of bank crisis management and resolution ; oversight of the shadow banking system ; and – very importantly – the further regulation and oversight of financial markets and their functioning. iv. conclusion let me conclude. the euro area as a whole has witnessed an unprecedented degree of price stability since its inception more than 12 years ago. this has been accompanied by economic performance in terms of growth per capita and job creation that compares positively with other large advanced economies. it is also remarkable that there is convincing evidence that the euro area and the united states of america have similar features in terms of diversity of the economies that are part of these vast continents : member countries on this side of the atlantic and the states on the other side. this is documented, in particular, as regards asymmetric inflation, asymmetric growth developments and even in terms of somewhat persistent asymmetric gains and losses of competitiveness. therefore, it is important to redress a common belief which is unfounded, in my opinion, namely that the euro area as a whole is significantly more heterogeneous economically, with more dispersion and higher levels of standard deviation of a number of important indicators than the us. but what remains true is that governing these very vast and equally diverse economies with a single currency is more of a challenge in a union of sovereign states than in a political federation. that is the reason why the european central bank is stress

agency problem that sits at the very heart of corporate governance. certain board members in the banking industry, rather than being guided by such principles that best serve the interests of their banks, often use their authority to advance their own agenda. this attitude is anathema to the principles of good governance. in the banking industry, integrity should be a palpable mark of distinction. by integrity i mean that board members do not make decisions just for a quick buck. it means board members are not solely transaction - driven ; they are in for the long - term benefits of their companies as well as of their clients. it also means that, if things do not go well, board members stand by their clients and if things do go well they do not take unfair advantage of it. while profit making remains the principal motive for any enterprise in a capitalist system, a usurious attitude in the banking business does quite often bring with it the seed of self - destruction. the good banker formulates an educated view before executing any decision in his professional life. i have been receiving many complaints from bank customers in the last five years. few of the complaints that i receive seem reasonable. most of the complaints, after investigations, are found to be unreasonable. it is a common feature that borrowers do not pay sufficient attention to the contents of contracts they sign before borrowing. often borrowers tend to swallow more than they can chew. it ’ s panic when the banker finally applies the sword. my appreciation of such a situation leads me believe that both bankers and borrowers share the blame. to borrowers i would like to say : refrain from borrowing sums of money that is beyond their repayment capacity. to bankers, i would like to reiterate that they should, right from the outset, ensure that borrowers do have the repayment capacity before disbursing funds to them. some banks do it ; some don ’ t. we are contemplating anti - collusive measures. lately, various interpretations have been given to the monetary policy stance of the bank of mauritius. five years ago, the bank of mauritius tightened its monetary policy stance with the rate of interest having gradually risen to high levels. the then prevailing conditions did warrant the tightening. it is commonplace that economies do undergo cyclical changes. the same set of policies that is appropriate for a particular phase of the economic cycle may not necessarily be appropriate for a different phase of the cycle if the objectives of the bank ’ s policies are to be achieved.