present debate some conclude that the current policy framework should be relaxed, which is normally expressed as saying it should become more flexible. i have difficulty understanding this view. on the contrary, i think the developments in recent years have strengthened the arguments in favour of a regulatory framework. from the start there were concerns about “ free riders ”. these concerns were confirmed sooner than expected. there was also some unease that small countries could be affected if the larger ones did not maintain discipline. here, too, developments have given cause for concern, at least as regards the implementation of the regulations. allow me to add a third argument. during the decades before the start of monetary union, economic policy in the eu was dominated by germany. this was because of germany ’ s size, of course, but it was also due to germany ’ s economic success over several decades and its stable economic policies. there was almost a moral dimension to germany ’ s actions. i still remember the meeting in the monetary committee when it became clear that germany ’ s public finances in the coming years would be as weak as italy ’ s. the dynamics in the room changed as if by magic. since then no country has been able to take over the leader ’ s mantle. in such a situation peer pressure can easily turn into peer protection. let me now turn to the future. in doing so i have tried to be constructive and limited myself to proposals i believe to be politically feasible. i will be happy to return to any of the subjects i will bring up. i. my first point concerns the division of labour and the cooperation between fiscal and monetary authorities. this is firmly established in the treaty. the only uncertainty relates to the responsibility for exchange rate policy. of course all parties must respect the existing rules. the demands that fiscal authorities can impose on the ecb are that the bank conducts a clear, consistent monetary policy aiming at price stability for the union as a whole, which can be understood and predicted. in the same way the authorities responsible for monetary policy should be able to count on a clear, predictable and long - term fiscal policy targeted at achieving balance over the economic cycle ( after taking account of the demographic changes that now lie ahead ). more generally, i think that we in europe should model our approach on cooperation between the monetary and fiscal authorities along the lines of the relationship between the fed and the treasury during the clinton years. europe would also be better off if the finance ministers followed the advice of my british colleague at a recent meeting

support to young researchers by funding five lamfalussy fellowships every year. thomas philippon ’ s contributions represent an excellent example of policy - relevant research. i will consider two main areas of his research which i find particularly interesting : the design of optimal interventions and the efficiency of the financial sector. in his 2012 paper, published as the lead article in the american economic review, thomas and his co - author vasiliki skreta study the design of optimal public interventions in debt markets. the intervention aims at restoring an efficient level of investment when productive investments are forgone because firms face unfairly high interest rates due to adverse selection. 2 the topic of the paper was – and still is – very timely since asymmetric information played a crucial role in the collapse of the financial markets in the autumn of available at https : / / www. ecb. europa. eu / events / pdf / conferences / 140623 / mars _ report. pdf. philippon, t., and v. skreta, ( 2012 ) “ optimal interventions in markets with adverse selection ”, american economic review, 102 ( 1 ), 1 – 28. bis central bankers ’ speeches 2008. 3 thomas philippon ’ s paper identifies some of the key issues associated with the intervention. in particular, he analyses the interaction between the intervention and the conditions that firms face in the market. decisions by firms to participate in a support programme are influenced by these conditions – how difficult it is to raise funds from the market. at the same time, a firm ’ s acceptance of public assistance may be perceived as a “ bad ” signal, thus limiting its incentive to participate. this is the problem of the stigma attached to support programmes. the paper spells out two clear implications for policy. first, it provides robust conceptual support to the idea that the choice of intervention depends crucially on the nature of the frictions and that it should resemble the contract used by market participants. for example, in the case of a freeze in a debt market due to adverse selection, the optimal intervention requires debt instruments, such as direct lending or debt guarantees. second, it highlights that the stigma associated with the intervention can be a relevant issue and the design of a programme should take this into account. the ecb had to deal with this issue, for example, in the context of the first two longer - term refinancing operations announced in december 2011. when some bankers raised concerns that there might be stigma attached to the ec