– that is, for losses to be properly acknowledged and for adequate recapitalisation to follow. this is why our ongoing see for example foster, lucia, john haltiwanger, and chad syverson ( 2008 ), “ reallocation, firm turnover, and efficiency : selection on productivity or profitability? ” american economic review, 98 ( 1 ) : 394 – 425. albertazzi, u. and marchetti, d. j. ( 2010 ), “ credit crunch, flight to quality and evergreening : an analysis of bank - firm relationships after lehman ”, working paper, banca d ’ italia. oecd economic surveys : greece 2013 ( november 2013 ). bis central bankers ’ speeches comprehensive assessment of banks is so important. it will not only restore confidence in the sector, but also create the conditions for potential growth to recover more quickly. the assessment has a further benefit as well : it ensures the ecb ’ s low interest rates do not encourage banks and firms to delay restructuring. in this way, it allows us to maintain the monetary policy stance that is appropriate for the euro area, while mitigating any possible negative effects linked to misallocation of resources. the second priority is to encourage alternative funding sources in the euro area and to develop capital market financing, so that long run productivity growth is not so dependent on the health of banks. to some extent this is happening organically : corporates in large countries are already substituting bank lending for security and equity issuance. but this option is largely not available for smes, making them very sensitive to banking sector stress. this is why i have been vocal in supporting the revitalisation of the securitisation market in europe, which has virtually dried up in recent years. i see this as an important tool to help banks manage the credit risk associated with lending to smes. however, for it to recover it is critical that the regulatory treatment of asset - backed securities ( abs ) is based on real data and not the legacy of the us sub - prime disaster. we have a very different experience with abs here in europe : between mid - 2007 and the first quarter of 2013 the default rate on abs in the eu was only around 1. 4 %, whereas it was 17. 4 % in the united states. 6 structural reforms while financial sector repair can help ensure that credit flows to the most productive firms, we also have to ask the question : where will those firms come from

public and private sector balance sheets. they include reducing the still high rates of unemployment for the long - term unemployed and the young. and they include restoring the functionality of the banking sector, so that it supports rather than hinders the domestic economy as it emerges from the crisis. oecd economic surveys : germany 2012 ( february 2012 ). lusine lusinyan and dirk muir, “ assessing the macroeconomic impact of structural reforms : the case of italy ”, imf working paper, january 2013. ramon gomez - salvador, alberto musso, marc stocker and jarkko turunen, “ labour productivity developments in the euro area ”, ecb occasional paper, no. 53, october 2006. bis central bankers ’ speeches conclusion let me conclude. the challenges the euro area is facing today to raise its growth potential are not new. since the 1990s we have known that supply conditions in the euro area needed to be reformed. this was the aim of the failed lisbon agenda. and indeed, it was the context for a famous quote about the apparent inconsistency between reform and re - election. what is new today, however, is the urgency for action. we are facing the risk of a structural set back in growth. we can therefore no longer afford to delay, nor should we over - burden monetary policy. structural reforms are a must. for this reason, the apparent contradiction between reforms and re - election may now be moot, simply because citizens want growth, and without reforms it will not materialise. there is no country in the euro area that has delayed reforms and achieved economic outcomes with which their citizens are content. when i think of the euro area today, i am reminded of winston churchill ’ s line about “ always doing the right thing … after exhausting all the alternatives ”. we have spent two decades exhausting all the alternatives in europe – and so now i trust that the only path left to us is the right one. bis central bankers ’ speeches