3 % of its gdp within a one - year period. moreover, a country ’ s overall sovereign debt should not go beyond 60 % of its annual gdp. these rules are designed to prevent governments from exerting pressure on monetary policy makers, as lower interest rates allow governments to borrow more cheaply. or due to the fact that existing debt is devalued by a higher rate of inflation. so far so good. 4. crisis however, things turned out differently than expected – above all because the carefully drafted financial policy rules were not complied with. most countries were far from having a balanced budget, and public deficits often even exceeded the three - percent threshold. debt levels in the member states were often not lowered either. the exact opposite was the case in some countries for that matter. at the same time, market participants did not trust sufficiently in the no bail - out principle i touched on earlier. despite the very large differences in debt levels and economic developments among the euro - area member states, they aligned their risk premiums to a great extent, which, in turn, led to the already strongly indebted countries becoming more indebted. in the end, confidence in the capital markets vanished with regard to whether the future crisis countries would still be able to service their sovereign debt in accordance with the rules. this culminated in investors granting these countries loans only at very high interest margins or withholding them altogether. at the same time, it became clear that the countries that were later hit by crisis had failed to set up sound and sustainable economic structures that were beneficial for growth. instead, enterprises and households often took advantage of the substantially lower interest rates as a result of joining the euro area and ran up great amounts of debt. and rather than investing this money in expanding competitiveness, it was used for private and government consumption. bis central bankers ’ speeches wages increased to a considerably larger extent than productivity, with price competitiveness eroding as a result. and last but not least, cheap loans and capital inflows fuelled the real estate bubbles in ireland and spain. this is why this “ special boom ”, which was caused by low interest rates, was anything but sustainable and sparked the crisis in europe. although, to be precise, “ the crisis ” was a conglomerate of various crises, encompassing financial market crisis, economic crisis and sovereign debt crisis. above all, however, it is a crisis of confidence, the complexity of which is also reflected in the fact that the

, the west european countries strived for deeper european integration, for a united europe. the reasons for this were many and varied. securing peace within europe was undoubtedly the dominant rationale. bis central bankers ’ speeches the relationship between european neighbours france and germany played a key role in this context. hostility between the two nations, be it overt or latent, had persisted for centuries. this so - called “ franco - german enmity ” was surmounted in the wake of the devastating second world war and developed over time into a franco - german friendship, an engine driving the process of european unification and integration. however, belonging to a community of values was of particular importance to germany following the hitler dictatorship and the holocaust. konrad adenauer, the first chancellor of the federal republic of germany, expressed this as follows : “ the unity of europe was the dream of a few. it became the hope of many. today it has become a necessity for all of us. ” but there was also a desire to sustainably improve europe ’ s economic prosperity. it is not incidental that european integration began by stepping up economic integration. after the second world war ended, progress was made on various fronts, culminating initially in the single european market. the foundations of this single european market were the “ four basic freedoms ” : the free movement of people, goods, services and capital. but it became evident at an early stage that economic integration in europe could only really take off if it was accompanied by a stable single currency. as far back as the start of the 1970s, there existed a plan to establish a european economic and monetary union that was to be fully implemented by 1980. ultimately, progress was not so rapid after all. no serious attempt to establish monetary union was made until jacques delors took over the presidency of the european commission in the late 1980s. the maastricht treaty was later signed by eu member states in 1992. 3. european monetary union and its regulatory framework in 1999, the long - cherished dream of european monetary union became true, marking a major step towards deeper european integration. introducing a single currency had tangible benefits. prices of goods could be more easily compared throughout the member states. exchange rate risk was eliminated and transaction costs fell. this in turn promoted trade, not only within the monetary union but also with the rest of the world. money and capital markets converged further. and, last but not least, the euro brought with it a period of remarkable price stability for the member