threat of self - fulfilling downward spirals calls for massive intervention. but even if this were the case – and let me make this very clear – it would be up to democratically elected governments, and not up to central banks, to take the necessary action. central banks can give advice – but only governments have the authority, conferred by their democratic legitimacy, to make changes to regulatory systems. i am sure that the programme of this conference so far has provided enough material for interesting discussions tonight and for the rest of what will undoubtedly be a fruitful, productive and successful conference tomorrow. bis central bankers ’ speeches

well - respected academics. however, these petitions are perhaps not as incompatible as it might appear. obviously, one comes to different conclusions if the reasoning is based on different assumptions. and the different assumptions stem from the various interpretations of the results of the european summit in june. the core statements of the petitions about the banking union are not disputed. for me, these core statements are : “ there should not be unconditional collective accountability for the debts in the euro area ” and “ banking supervision in europe needs to be harmonised and improved. ” and although not everybody may agree with the style and details of the different petitions, most people probably concur with these two main messages. i, for my part, concur with both statements. bis central bankers ’ speeches both messages are related to a question which is central in economics – and which is also a topic for our conference : what role should we assign to the state? and what role should markets play? the role of the state ten or even five years ago, the opinion in the academic world was relatively unanimous with respect to the role of the state in the banking sector : the state and regulators were seen as an obstacle to economic growth, and state - owned banks were perceived as the flotsam and jetsam of free market economies. “ let the market deal with the issues of the financial sector, and capital and risks will be efficiently allocated, ” most academics argued. a saying attributed to the well - respected former bavarian prime minister franz - josef strauss comes to mind : “ a dog is more likely to put away a sausage for a rainy day than the state is to save money. ” then came the financial crisis. the distrust in the state among mainstream academics has remained. however, there is now distrust in markets as well, perhaps surpassing distrust in the state. in the academic community and the media, there has been a debate about excessive bonuses for bankers, about distorted incentives for risk - taking in banks and, last but not least, about the role of rating agencies. to my mind, the crisis has shown that, like it or not, the state is needed as the ultimate guarantor of systemically important functions of the banking sector. in a systemic crisis, deposit insurance schemes can succeed only if the state, and thus the taxpayer, credibly guarantees the liabilities, as illustrated, for example, by the tv appearance by chancellor merkel and finance minister steinbruck in 2008, in which they guaranteed all banking