be achieved in an orderly way only through an agreement between creditors and debtors. other forms of constrained action, on the creditor or on the debtor side, are bound to lead to litigations and produce disorderly effects on financial markets. in this respect, the adoption of collective action clauses by the euro area member states would make it easier for creditors and debtors to agree on a fair burdensharing. this was the conclusion of the discussions in the context of the imf and can be further explored at european level. another way to prevent market participants from being bailed out is to use the funds made available from the official support mechanism to purchase debt on the secondary market, at the prevailing market discount, rather than reimbursing the maturing debt at the nominal value. in this way holders of debt instruments willing to sell would have to accept the market haircut. this possibility is envisaged in the ecb ’ s proposals. to conclude, the european union is a community of law, subscribed to by the member states in which pacta sunt servanda. this refers to all the pacts, starting from fiscal discipline in the member states to the commitment of the member states to pay their debts. in my view, we have to be very careful in considering exemptions, such as providing the possibility for countries to unilaterally modifying the value of their debt contracts. the euro, and its underlying institutional construction, is about respect for the law. if any changes are to be made, they should be to strengthen these principles rather than to provide exemptions – dangerous exemptions which could undermine the stability and cohesion of the whole union. thank you for your attention. chart 1 : tensions in euro area selected intra - euro area spreads against germany ( 10y ) source : bloomberg chart 2 : tensions in euro area selected government credit default swaps ( 5y ) source : bloomberg chart 3 : dysfunction in the bond markets daily change in bond prices ; in percent source : bloomberg. note : on 10 may, change in bond prices rose to + 35 % for greece and + 14 % for portugal. chart 4 : credit risk of eu banking system source : bloomberg

and monetary union. in addition, growth should not be pursued at all costs, and certainly not on the back of unsustainable policies leading to debt overhang and macroeconomic imbalances, which inevitably lead to costly an expression borrowed from s. collignon ( 2004 ). vive la republique europeenne! editions de la martiniere. quoted by j. - c. trichet in “ building europe, building institutions ”, speech delivered on receiving the karlspreis in aachen, 2 june 2011. incidentally, an increasing body of literature emphasises the importance of economic “ culture ” on economic outcomes. see for instance s. butzer, c. jordan and l. stracca ( 2013 ). macroeconomic imbalances, a question of trust? ecb working paper series, no 1584 / august 2013. see also y. algan and p. cahuc ( 2007 ), la societe de defiance. comment le modele social francais s ’ autodetruit. editions rue d ’ ulm. bis central bankers ’ speeches adjustments in terms of activity, employment and social protection. at the same time, risktaking must be at the service of entrepreneurship, not of financial speculation. common values imply exemplary institutions. this is true in terms of ethics ; in this respect, eu institutions in general and the ecb in particular have enacted strict codes of conduct for their staff members and senior executives. this is also true in terms of offering equal opportunities and promoting diversity. in the words of jorge semprun, “ europe cannot be based on the exclusion of diversity ; it must be built on the essential unity of diversity ”. 16 the ecb has recently launched an initiative to promote gender diversity, including detailed targets at management level. these efforts would be significantly complemented if member states were also to promote this diversity in the ecb ’ s top decision - making body, the governing council – which consists solely of men. a second pillar should be european cohesion from the domestic perspective, cohesion entails having a common understanding of fairness and showing solidarity. cohesion also – and notably – means clarifying the rights and responsibilities between member countries so that it is based on mutual trust. it also implies that member states should submit to stronger fiscal, economic and financial governance. once trust is established, the social contract between member countries – solidity with solidarity – can be expressed in a variety of ways. one way is by having public