central bank independence. we expect from governments strict respect for the principle of budgetary discipline and effective mutual surveillance. the purchases made on the secondary market cannot be used to circumvent the fundamental principle of budgetary discipline. the securities markets programme strictly aims at correcting malfunctioning of markets. the prohibition of monetary financing underlines precisely the fact that budgetary discipline is of the utmost importance. we have taken note of the precise additional commitments taken by some euro area governments to accelerate fiscal consolidation and to ensure the sustainability of their public finances. ” i have nothing to withdraw from these remarks of may 2010. they remain fully valid. we expect from governments strict respect for the principle of budgetary discipline and effective mutual surveillance. it is of utmost importance that these commitments are now implemented strictly and timely. they need to be backed by concrete measures. this applies to both the imf / eu adjustment programmes and the renewed commitment of all euro area governments to the agreed fiscal targets. the full and timely implementation of the 21 july agreement between heads of state or government is of essence in this respect. while a special arrangement for greece has been launched, the inflexible determination of all other euro area governments to fully honour their own individual sovereign signature is key in returning to sustainable and healthy public finances and contribute to stable market conditions. thank you for your attention. speech on “ the ecb ’ s response to the recent tensions in financial markets ”, economic conference of the oesterreichische nationalbank, vienna, 31 may 2010. bis central bankers ’ speeches

greater potential for stronger non - inflationary economic growth. regarding risk sharing, it is interesting to note that in the us, according to a particularly interesting research, capital markets would smoothe out 39 % of the asymmetric shocks to gross state product ( the equivalent of our gdp ), the credit channel would smoothe out 23 % of such shocks and the federal government, through the fiscal channel, 13 %. 25 % of the shocks would not be smoothed out. 2 hence in the united states financial markets and financial institutions would contribute 62 % to the absorption of state idiosyncratic shocks. the effect is very substantially higher than the effect of the federal budget. we see from the us example that the financial channel can be much more important than the fiscal channel and that is a particularly important additional reason to speed up financial integration in europe. financial integration is also very important for stimulating economic growth in europe via its impact on the development of the european financial system. financial development refers to the process of financial innovation, and to the institutional and organisational improvements in a financial system that see the ecb ’ s website at http : / / www. ecb. int / pub / pdf / other / financialintegrationineurope200703en. pdf. see p. asdrubali ; b. sorensen ; o. yosha, “ channels of interstate risk sharing : united states 1963 - 1990 ”, the quarterly journal of economics, vol. 111, no. 4, november 1996, pp. 1081 - 1110. reduce asymmetric information, increase the completeness of markets, add possibilities for agents to engage in financial transaction through ( explicit or implicit ) contracts, reduce transaction costs and increase competition. progress in financial development can obviously also occur in perfectly integrated markets. therefore, by speeding up the reallocation of capital from declining to evolving and promising industries – the schumpeterian process of “ creative destruction ” – both processes of financial integration and financial development positively influence the efficiency of a financial system, ultimately leading to a higher potential for economic growth. for example, a research study by london economics estimates the benefits of the integration of european bonds and equity markets to be around 1 % of gdp growth over a ten - year period, or approximately €100 billion. 3 whereas an indicator for the degree of integration of a european financial market could build on the law of one price, a possible indicator for the degree of development of the financial system could be the