acknowledged, however, is that these imbalances would only affect german taxpayers in the event of a break - up of the euro area. this means that actions by the ecb that protect the euro area against such outcomes – like the omts – also reduce hypothetical risks for german taxpayers. and this is exactly what we have seen. since the announcement of the omts, the bundesbank ’ s target - 2 exposure has decreased by more than 100 billion euros. in sum, the ecb has acted, and will continue to act, to fulfil its mandate. we are committed to preserving the integrity of our currency, in the interests of all people of the euro area. we do not act to help banks. we do not act to help governments. we act to help maintain the flow of credit to real firms and households. we act to preserve price stability. incidentally, while some in this country are wondering whether the ecb does “ too much ”, elsewhere in the euro area i am asked why the ecb does not “ do more ”. i just returned from the spanish parliament in madrid – and the concerns expressed there are very different from what i hear in germany. people worry that a stagnating economy will lead to the emergence of a “ lost generation ”, where young people have no jobs, and even worse, no hope. but our answer – both to those who want us to do less and to those who want us to do more – is the same : we will preserve price stability. this is our mandate. how governments play their part it is important to stress that the ecb ’ s mandate only extends so far. there are clear limits to what monetary policy can and should aim to achieve. we cannot repair unsound budgets. we cannot clean up struggling banks. we cannot solve deep - rooted problems in the structure of europe ’ s economies. bis central bankers ’ speeches our monetary union was deliberately constructed so that these policies would be the preserve of elected governments in each member state. sharing a common currency would only be sustainable if each country assumed its own responsibility. this reflects the subsidiarity principle embedded in our european treaties. and in that sense, it also echoes a central tenet of catholic social doctrine. as pope pius xi wrote in 1931, “ it is a fundamental principle that one should not withdraw from individuals and commit to the community what they can accomplish by their own enterprise and industry. ” 3 individuals have to do what they

economic adjustment burden is being fairly distributed? i know that this is an important concern of the european parliament. one essential avenue is the tax administration reform. progress in this regard has been rather disappointing so far : in many cases, wealthy greeks still contribute less than possible to the overall adjustment effort, partly on account of tax evasion. strengthening revenue administration and fighting tax evasion are crucial. not only are they needed to increase revenue ; they could also improve the social acceptability of the adjustment programme. competitiveness there has been some improvement in competitiveness under the first programme, but it fell short of what is needed : greece still faces a substantial competitiveness gap. this largely reflects delays in the implementation of labour market and other structural reforms. closing this gap, while remaining in the euro area, will require a more pronounced internal devaluation. how can it be achieved? how can we reverse the dramatic increase in unemployment? reducing minimum wages in the private sector, removing rigidities in the wage - setting system : these are key elements of the strategy for accelerating the internal devaluation. they may not be popular, but there is no way around it if we want to create the basis for renewed competitiveness and employment growth. this is not the only area where decisive action is needed. labour market reforms must be complemented by a liberalisation of product and services markets, for example in closed professions. political willingness is a key ingredient to overcome the resistance of vested interests in these areas. bis central bankers ’ speeches bank recapitalisation last but not least, greece needs to address the situation of its banking sector. as a consequence of the debt exchange, most greek banks are heavily undercapitalised. the programme envisages that banks deemed viable by the bank of greece will be recapitalised. banks that are unable to raise capital in the market will be recapitalised with programme resources through the hellenic financial stability fund ( hfsf ). in contrast, banks that are deemed non - viable will be resolved. it is crucial that the €25 billion earmarked for these purpose as part of the first disbursement be used for the swift injection of capital into greek banks ( the overall envelope for bank recapitalisation and resolution amounts to €50 billion ). the recapitalisation strategy was designed to maximise private sector participation, while preserving the state ’ s interests. the banks ’ shares acquired by the state in the recapitalisation process will have