warning systems and systemic risk indicators further. many of the tools it developed are already used in escb members ’ policy work. for example, the composite indicator of systemic stress ( short ciss ), 3 which was developed here at the ecb, has been used in our financial stability review and has now been included in the new risk dashboard that the esrb released after its last meeting in september. 4 research in this direction has also led to the creation of a homogeneous database of various types of crisis in eu countries. this database, which was established by researchers from the czech national bank with the input of all escb members, has just been made available to interested researchers on the ecb ’ s website. 5 a last major orientation of mars is the assessment of contagion risks. this concerns particularly the cross - border connectedness of banks and associated contagion risks in europe, notably via dysfunctional money markets. in view of the experiences of the last few years in europe, sovereign contagion effects received considerable attention. a whole “ battery ” of models and analytical tools for measuring and assessing sovereign contagion was developed. several of these models are regularly run here in the ecb as part of our surveillance of contagion risks. tobias adrian, paolo colla and h. song shin ( 2012 ), “ which financial frictions? parsing the evidence from the financial crisis of 2007 – 2009 ”, federal reserve of new york staff reports. see d. hollo, m. kremer and m. lo duca ( 2011 ), ciss – a composite indicator of systemic stress in the financial system, ecb working paper, no. 1426, march. european systemic risk board ( 2012 ), esrb risk dashboard, issue ( http : / / www. esrb. europa. eu / pub / pdf / dashboard / 120920 _ esrb _ risk _ dashboard. pdf? ). the link to the database is http : / / www. ecb. europa. eu / pub / pdf / scpwps / ecbwp1485 - annexes. zip. no 1, 20 september bis central bankers ’ speeches the assessment of contagion risk is one field where borrowing from disciplines other than economics can be useful. a number of promising efforts use the theory of complex networks to model interbank exposures, showing how asset fire sales can amplify interbank contagion. for our financial stability review and in

said that monetary union was only feasible if the prevailing principle of each member state bearing individual responsibility for its own fiscal policy was not undermined by collective liability. ladies and gentlemen in a monetary union, there are negative repercussions for all other member states if one country has excessive debt – even if they are responsible for their own budgets. a monetary union therefore requires fiscal guidelines. that is why the decision, taken in connection with the euro rescue measures, to tighten fiscal rules in a bid to promote individual responsibility was a step in the right direction. ultimately, however, applying the rules is what counts, or, to put it in the words of a footballer ahead of tomorrow ’ s important world cup match : “ it ’ s what happens on the pitch that matters. ” you cannot put it more succinctly than germany ’ s football legend adi preissler. as regards the proper application of the rules, some doubts are justified, as is evident from the current debate surrounding a flexible interpretation of the stability and growth pact. the pact, which was reformed less than three years ago, allows much scope for discretion. moreover, there is a risk that last week ’ s decisions of the european council will provide even more of a pretext for a lax interpretation. however, an excessively generous interpretation of this leeway would certainly undermine the credibility of the stability and growth pact. and let us not forget : in the medium term, the pact stipulates balanced or close to balance budgets. the 3 % mark that is frequently used as a yardstick is therefore a ceiling and is not intended as a regular target. this is, incidentally, also true of the 60 % debt ratio that almost all euro countries breach. the commission should therefore apply a narrow interpretation to the rules, and the german government should lend it its decisive support. that, too, is part and parcel of being a role model. nor is consolidation a growth brake, but rather a precondition for sustainable growth. more debt is no precondition for successful structural reform. binding debt rules are a necessary, but by no means sufficient, condition for strengthening the principle of individual responsibility in a monetary union. to this end, the no bail - out principle would have to be more credible, amongst other things. ultimately, that would mean allowing governments to become insolvent. that, in turn, requires robust banks : going forward, neither a sovereign default nor the insolvency of a major bank must threaten