with the stability and growth pact is reasonable in bad times when budget deficits are above 3 %, but poor in good times when countries should balance their budget. compliance with the macroeconomic imbalances procedure and the european semester should also improve. of the recommendations issued in 2015, only 4 % was implemented with substantial progress. around 46 % was implemented with some progress while 52 % showed limited or no progress. such a lack of enforcement increases the likelihood of new imbalances and future calls on european risk - sharing. second, emu would benefit from more private risk sharing. during the crisis european governments provided support with taxpayers ’ money. but private companies, investors and banks shared far fewer risks. private risk sharing is underdeveloped in emu, and there is much to gain on this score. academic research suggests that in the u. s., private risk - sharing smoothes out a larger percentage of shocks ( around 62 % ) than does public risk sharing via the federal budget ( around 13 % ), findings that are more or less confirmed for germany as well. does the answer lie in more integration? 6 / 15 the key question of course is how emu should be strengthened further. it is often assumed that further european integration is the answer, for example by way of more binding policy coordination, which implies a transfer of sovereignty to brussels. many also favour more public risk sharing, such as a european budgetary stabilization fund. further european integration would probably improve the functioning of emu. but these steps are controversial, and may not be politically feasible in the current environment. in countries like germany and the netherlands, the controversy especially concentrates on a further increase in public risk - sharing. the fundamental problem is that member states still differ substantially in terms of adaptability, overall competitiveness and institutional quality. if starting positions differ so much, a stabilization fund might not result in fair risk sharing, but in a permanent one - way transfer system. therefore, any further increase in public risk sharing should be accompanied by stronger risk reduction. that would restore the balance between liability and control. however, this would also necessitate a further transfer of sovereignty to brussels ; a policy that is equally controversial in many member states. as a result, large leaps forward in integration are hard to conceive at the moment. but fortunately small steps may also combine to achieve a great deal of improvement. let me conclude by mentioning four no - regret options. first, improve compliance with the stability and

problem of disconnectedness. while globalization has made the world smaller, and rapid expansion in transportation and communication technology has connected people from around the world, it has also accelerated a detachment of business entities from their community, society, and nation. this is particularly true with the multinational companies where the intense pressure to maximize shareholders ’ wealth disconnects the firm from its non - business stakeholders. the dominance of capital over labor has generated an increasing tension and disconnect between labor and capital which has undermined the virtue of justice, loyalty and trust. practice of using human resource in an inhuman way, lack of safety at work, weak social security, and outsourcing and bogus contract in labour market are some of the examples in this regard. with little loyalty to the company, employees feel disconnected from their own company which damages the relationship between labour and capital. due to this, industrial relation has worsened and factor productivity has often been adversely affected. bis central bankers ’ speeches we know that business ethics of today has to be broadly viewed from free market approach which is based on the premise that the economy works best when it is left to its own course. for this thought, profit is the invisible hand which best allocates resources and produces most efficient results. but we have observed that while maximizing wealth through profit accumulation, ethical and moral standards are often undermined, and norms are violated. although the current financial crisis has given a setback to the free market notion and reestablished the role of the state, government regulations are, for the most part, viewed as constraining growth and adding unnecessary costs. this notion has enhanced the disconnection between private sector led economic growth and justice, equality and mass wellbeing. empirical studies show that companies with better codes of business ethics and conduct produce an above - average performance when measured against a similar group without codes. however, while the link between ethics and performance is certainly found strong, that does not prove that one causes the other. it might be the case that high - performing companies adopt codes of ethics rather than the other way round. either way, by strongly suggesting that there is no inherent contradiction between being good and doing well, research findings signal to a shift of debate on ethics to more productive terrain i. e. having a code of business ethics might be one hallmark of a well - managed and sustainable company rather than simply a waste of shareholders ’ money. distinguished participants, let me briefly touch upon the financial industry while talking ethics in business