were not foreseen before 1999 – and that also need to be addressed through common solutions. hence, the banking union we are aiming for today goes beyond purely banking supervision : in my view it must comprise five elements. first, a single rulebook for banks. second, a single framework for banking supervision. third, a single mechanism for resolving banks, funded by levies on the sector itself. fourth, a common backstop in case temporary fiscal support is needed. fifth, a common system for deposit protection. harold james, making the european monetary union, pp. 313 – 315. padoa - schioppa, t., “ emu and banking supervision ” lecture in the london school of economics, on 24 feb 1999. bis central bankers ’ speeches how would banking union have helped during the crisis? to illustrate why these elements are so important, it is helpful to think through how a genuine banking union in europe could have helped both prevent and mitigate the crisis. preventing the crisis turning first to prevention, one of the key causes of the crisis was the unacknowledged buildup of large private financial imbalances in the period from 1999 to 2008. they were unacknowledged because the governance framework that existed in europe was focused exclusively on fiscal policies via the stability and growth pact. this reflected the prevailing belief at the time that the private sector was composed of fully rational agents and was essentially stable and self - correcting – hence only the public sector could create instability. this was of course a fiction : the private sector was where some of the largest imbalances were concentrated. between 1999 and 2007, the ratio of public sector debt to gdp in emu declined on average by around 6 percentage points – while the ratio of private sector debt to gdp increased by almost 27 percentage points. to give just one example, in spain the ratio of private sector debt to gdp increased by around 75 per cent, while the ratio of public debt to gdp fell by around 35 per cent. the key point for this discussion was that all of these private flows were being intermediated by the banking sector, which had become much more integrated as a result of monetary union. hence the official bodies best placed to identify these growing risks, and act to prevent them, were national bank supervisors both in lending and borrowing countries. however, they lacked both the cross - border perspective and also the instruments to do so. after all, their mandates were national and did not extend to systemic risks building

to halt economic activity, and so we will be watching these sectors closely to see how this moderation continues. growth in consumer spending has also begun to slow. while that growth was surprisingly strong through most of the second half of 2022, nominal personal consumption expenditures growth slowed to 0. 1 percent in november, and retail sales fell 1 percent. we don't have spending data on goods and services for december, but retail sales fell another 1. 1 percent. while the latest readings of consumer sentiment from the university of michigan moved up some from historic lows, i continue to expect that last year's decline in real incomes, along with higher borrowing costs, will moderate consumer spending this year and help return inflation more promptly to the fomc's 2 percent target. job one is maintaining the progress we are making in lowering inflation, and moderation in consumer spending will support that progress. 1 / 4 bis - central bankers'speeches the slowing in output growth has occurred alongside the continuing strength of the labor market. total nonfarm employment grew 223, 000 in december, close to the average of 237, 000 a month for the fourth quarter. that is down quite a bit from the monthly increase of 539, 000 in the first quarter of 2022 but still a solid growth rate, far above the number of new jobs needed to keep pace with population growth. employment grew robustly in the leisure and health - care sectors, where labor shortages are reportedly severe. while the labor market is strong, it is also tight. the unemployment rate was 3. 5 percent in december, matching the low reached before the pandemic, and the lowest in 53 years. but there are signs that demand for labor is moderating. job openings reported in the november job openings and labor turnover survey and job postings from december's indeed data are down from their recent peaks. temporary - help employment, which has sometimes been a leading indicator for overall employment, has declined in recent months, but that decrease may be due at least in part to employers opting to hire full - time workers in place of temps to help keep jobs filled. a robust labor market, despite modest economic growth, is a plus for workers and allows the fed to focus on lowering inflation. it shows that jobs and income can hold up to the effects of higher interest rates, helping the fomc continue its efforts to lower inflation to our 2 percent goal by further tightening monetary policy. a potential downside of a tight