to bear the bulk of the losses if a government could not service its debt. i have always supported this arrangement because it ensures that the ecb does not introduce a fiscal union through the backdoor. that means that if the italians failed to repay their debt they would in the first instance harm themselves. the italian central bank would then bear the heaviest losses. i can ’ t comment on hypothetical scenarios. the euro area heads of state or government want to launch a reform of monetary union 1 / 4 bis central bankers'speeches in june. as you said yourself, the economy is growing, the crisis is over. why the need for yet more reforms? indeed, the euro area expansion is strong and broad based. but as christine lagarde, the head of the international monetary fund, often says [ quoting jf kennedy ] : the time to repair the roof is when the sun is shining. europe has been made more stable over the past few years, but we are not there yet and now is the right time to complete the job. have you honestly ever met a politician that fixed the roof when the sun was shining? most only start repairing it when it ’ s raining. that is understandable, but if you ’ re right, it means that when the next crisis occurs european leaders will once again have to improvise a wobbly solution during a hectic late - night meeting in brussels. i don ’ t think that ’ s how citizens expect europe to be governed. but isn ’ t that precisely how europe has always been governed? it was at the height of the debt crisis, because the situation at the time was unprecedented. the problem with late - night meetings is that, while we can get things done and indeed succeeded in doing so then, this type of improvised decision - making sows the seeds of mistrust – between governments, between citizens and politicians. it is not a tenable situation. europe needs stable rules and institutions. in this connection, the ecb has called for a european deposit insurance scheme. so german banks would have to pay towards reimbursing savers in italy and spain if banks in those countries failed. how would that make europe more resilient to crises? let me put this discussion in perspective. we need three lines of defence for our monetary union. the first is to have well - functioning private markets, which are not yet fully in place. the single market needs to be completed, particularly in the services sector. capital markets are

also still too domestic. the second line of defence is to have sound fiscal policies in the member states. most countries have now reduced their deficit, but that is mainly thanks to favourable cyclical conditions. fiscal improvement should be made structural, otherwise governments won ’ t have fiscal space when the next recession hits. euro area - wide protection mechanisms such as the european stability mechanism, the single resolution fund for banks, or a new deposit insurance scheme are only the third line of defence. all existing currency unions have such or similar mechanisms to safeguard the stability of their currency. what exactly does deposit insurance protect us against? for one, it can enhance confidence in the banking system by preventing savers from emptying their bank accounts in a crisis situation. history has taught us that such bank runs are highly dangerous. that all sounds fine, but germany has a different perspective : a common deposit insurance scheme means that germans would also be affected if, say, a bank in italy failed. to return to the metaphor : if it rains, the roof would be in a worse state after the repair than before. why should we agree to that? with a proper european deposit insurance scheme, germans would have fewer problems rather than more. a deposit insurance scheme should be seen as an insurance against economic risks, just as you take out liability insurance to protect yourself against the risk of an accident. if risks are properly priced, it ’ s not a system of transfers between countries and still less from the “ north ” to the “ south ”, as is too often argued. of course, banks would need to further reduce risks before the deposit insurance scheme is introduced. much has been done recently in that respect. 2 / 4 bis central bankers'speeches and if the reforms can ’ t be managed by june? at the moment, all parties seem to be busy drawing their red lines. it would send a more positive signal to think about what they can achieve together. let me give you two reasons why this is urgent. first, who knows what the next crisis will look like? if our monetary union is not made stronger now, then the ecb will have to come to the rescue again the next time there is a crisis, and this may then lead us to test the limits of our mandate. who knows what the next crisis will look like? that ’ s not what germans expect of a central bank, and rightly so. second, the world is in disarray, and many expect europe to show the way. failing