not to discuss any issues related to monetary policy in the week prior to those meetings and i will of course honour this agreement. thus, all i can say with regard to the current situation is that the end of the crisis is coming closer – slowly but surely. this is also the message of the eu commission ’ s spring 2014 forecast that was published on monday. referring to the forecast, commission vicepresident siim kallas stated that “ recovery has now taken hold ”. but looking back, the question is : how did we get into that problem in the first place? to answer this question, let us take a look back to 25th march 2010. 2. looking back : the causes of the sovereign debt crisis on that day, jean - claude juncker, then president of the eurogroup, made a statement on greece. this statement included the following words : “ as part of a package involving bis central bankers ’ speeches substantial international monetary fund financing and a majority of european financing, euro - area member states are ready to contribute to coordinated bilateral loans. ” that sounds somewhat long - winded. put simply, it means that the euro - area heads of state and government were ready to support greece financially. that statement could be seen as the official start of the sovereign debt crisis in the euro area, the “ starting shot ” so to speak. it wasn ’ t of course the real start. the crisis was not something that happened suddenly, but rather the end of a long road. and the road leading out of the crisis is just as long. it is just as long, but much more arduous, particularly for those countries which are directly affected by the crisis. and everyone agrees on where the road should lead : a stable monetary union. what is controversial, however, is what road we have to take in order to arrive at that destination. and this seems natural as there are a very large number of angles from which it is possible to look at such a complex phenomenon as the sovereign debt crisis. and depending on the angle, it is possible to tell somewhat a different story. the core elements of those stories are always the same, however. we can find them at both the national and the european levels. let us first take a look at the national level ; in other words, the countries themselves. following the introduction of the euro, a large amount of capital flowed into the countries which are now at the centre of the crisis such as greece, ireland, portugal, spain and

the banks were under national supervision. the objective of the stress test is to assess how resilient banks are to stress scenarios. any capital shortfalls revealed by the comprehensive assessment have to be rectified before the banking union starts. ideally, this would primarily involve private funds. if private funds should not be available and the bank has a sustainable business model, the respective government could step in. ultimately, it is a question of who is responsible for past failings in banking supervision – and that is the individual member states. bis central bankers ’ speeches the comprehensive assessment will allow the banking union to start with a clean slate. at the same time, it will support the necessary deleveraging of european banks. balance sheets will eventually be “ cleaned up ” and any doubts regarding their quality will be removed. this will improve banks ’ capacity to lend to the real economy and thus support economic growth. against this backdrop, it is crucial that the comprehensive assessment is conducted in a tough and thorough manner. 4. conclusion ladies and gentlemen with regard to the sovereign debt crisis it seems that soeren kierkegaard ’ s advice did not fall on deaf ears. policy makers throughout europe looked back and understood the causes of the crisis. looking forward, they drew the right conclusions and initiated the necessary reforms – at the national and at the european level. against this backdrop, the greatest obstacle we face is certainly reform fatigue. this is something we must not allow to happen. completing the reforms is the only way for us in the euro area to achieve our objectives of a stable monetary union and a stable euro. this would not only benefit the euro area itself but each and every country in europe. i am confident that we are on a good path. thank you very much for your attention. bis central bankers ’ speeches