markets before legal confirmation illustrate the critical role of trust. even when followed to the letter, laws guide only a few of the day - to - day decisions required of business and financial managers. the rest are governed by whatever personal code of values that market participants bring to the table. commerce is inhibited if we cannot trust the reliability of counterparties ’ information and commitments. indeed, the willingness to rely on the word of a stranger is integral to any sophisticated economy. this necessary condition for commerce was particularly evident in freewheeling nineteenth - century america, where reputation and trust became valued assets. throughout much of that century, laissezfaire reigned in the united states as elsewhere, and caveat emptor was the prevailing prescription for guarding against wide - open trading practices. a reputation for honest dealing was thus particularly valued. even those inclined to be less than scrupulous in their private dealings had to adhere to a more ethical standard in their market transactions, or they risked being driven out of business. to be sure, the history of world business is strewn with fisks, goulds, and numerous others treading on, or over, the edge of legality. but they were a distinct minority. if the situation had been otherwise, nineteenth - century market economies would never have achieved so high a standard of living. over the past half - century, societies have embraced the protections of the myriad initiatives that have partially substituted government financial guarantees and implied certifications of integrity for business reputation. as a consequence, the value of trust so prominent in the nineteenth century seemed by the 1990s to be less necessary. most analysts believe that the world is better off as a consequence of these governmental protections. but recent corporate scandals in the united states and elsewhere have clearly shown that the plethora of laws of the past century have not eliminated the less - savory side of human behavior. we should not be surprised then to see a re - emergence in recent years of the value placed by markets on trust and personal reputation in business practice. after the revelations of corporate malfeasance, the market punished the stock prices of those corporations whose behaviors had cast doubt on the reliability of their reputations. there is no better antidote for business and financial transgression. corporate scandals and evidence of fraud and malfeasance notwithstanding, the history of ever - rising standards of living in a world fearful of violence is extraordinary testimony to the resilience of free peoples engaged in commerce. as president eisenhower opined

mario draghi : interview with the financial times interview with mr mario draghi, president of the european central bank, in the financial times, conducted by messrs lionel barber and ralph atkins on 14 december 2011 in frankfurt, and published on 19 december 2011. * * * financial times : we are now more than four years into the financial crisis. what lessons would you draw so far? what has gone right and what has gone wrong? mario draghi : we have to distinguish two stages. first was the financial crisis, with its repercussions for the real economy. i think we learnt the lessons that we need a more resilient financial system, a system where we would have less debt and more capital. there has been substantial progress in designing new regulatory policies and some progress in implementing this new design. the second stage of the crisis is really a combination of, i would say, a challenging political phase, where euro area leaders are reshaping what i called the fiscal “ compact, ” and a situation where banks and countries, face serious funding constraints. these challenging funding conditions are now producing a credit tightening and have certainly increased the downside risks for the euro area economy. action is proceeding on two fronts. at last week ’ s european union summit you saw a first step towards fiscal rules that are not only more binding, but actually are of a different nature. they would be binding ex ante, which is an entirely new quality, and written into the primary legislations of the member states. the second line of action is a set of meaningful, significant decisions taken by the ecb last week. we cut the main interest rate by 25 basis points. we announced two long - term refinancing operations, which for the first time will last three years. we halved the minimum reserve ratio from 2 per cent to 1 per cent. we broadened collateral eligibility rules. finally, the ecb governing council agreed that the ecb would act as an agent for the european financial stability facility ( efsf ). will the three - year refinancing operations give banks an incentive to buy “ periphery ” eurozone bonds? not necessarily. of course banks also have capital difficulties, and these measures don ’ t necessarily help them on that side. the objective is to ease the funding pressures that banks are experiencing. they will then decide what the best use of these funds is. one aspiration is to have them financing the real economy, especially small and medium sized enterprises