of a banking union – which would then have to start out under a heavy burden – or, for that matter, through central banks. and, in the event of such transfers, the proper sequencing of events is crucial. we should not end up in a world where risks arising from bank balance sheets are rapidly mutualised, while an effective single supervisory mechanism is slow in coming. getting the single supervisory mechanism and a common resolution and restructuring regime operational is very important. several conceptual questions need a convincing answer. how do we deal with the ten eu members that do not belong to the euro area? how do we ensure the effective separation of monetary policy and banking supervision? the devil is often in the detail. i firmly believe that europe has to get this project right and that it cannot afford to get off to a bumpy start. a banking union will not be a quick fix for the current crisis. but it is a major milestone on the road to a more stable and prosperous monetary union and hence instrumental in restoring confidence in the euro area. and this is the reason why i support it and why we need to get it right. 4. conclusion ladies and gentlemen the european debt crisis is heading into its fourth year, and there is still some risk that it will remain on everybody ’ s mind for some time to come. but, especially with regard to the macroeconomic rebalancing of the euro area, many signs point to a silver lining. restoring market mechanisms through structural reform is starting to pay dividends at national level, and this approach should also guide us when addressing the remaining weaknesses in the euro area ’ s architecture. asserting the principle of liability is key to breaking the negative feedback loop between banks and sovereigns. the task is daunting, often tedious and sometimes sobering. but i am convinced that it can be done and that the euro ’ s best days are still ahead of us. thank you for your attention. bis central bankers ’ speeches

the global economy and new zealand a speech delivered to the goldman sachs annual global macro conference 2020 in sydney, australia on 29 january 2020 by christian hawkesby, assistant governor1 1 with many thanks to cameron haworth for support. 2 the terrace, po box 2498, wellington 6140, new zealand telephone 64 4 472 2029 online at www. rbnz. govt. nz introduction tena koutou katoa. thank you for inviting me to speak at this conference on a topic that is so relevant to a small open economy like new zealand : the global economy. before re - joining the reserve bank of new zealand in march last year, i attended this conference a number of times, so appreciate its role in helping investors consider the global outlook across major regions as the year begins. as global investors, you are already well - informed on the state of the global economy. but i hope to add value by sharing two main insights : • outlining the framework we use at the reserve bank to analyse the global economy and its influence on new zealand, 2 and • applying this framework to the developments over 2019, and the risks into 2020. as our monetary policy committee will begin meeting next week for the first time since november, my remarks will largely focus on how we think about the global economy, and do not represent the formal view of the committee. what i would like to illustrate is that our monetary policy committee work like a team, much like you would in an investment committee. you follow an investment process to analyse the global outlook for investment opportunities and risks, to make decisions on how to construct your investment portfolios ; we analyse the global economy with an eye to the implications for our policy decisions to achieve our dual mandate for inflation and employment. our full process is set out in the monetary policy handbook. 3 background on 2019 before i explain the influence of the global economy on new zealand, it is useful to provide some brief context on the global economic environment through 2019. two structural factors characterise the current global economic environment from a central bank perspective : • • low inflation, and low neutral interest rates ( figure 1 ). these factors have been driven by, among other things, ageing populations, globalisation, the success of inflation targeting, and low inflation expectations. 4 low inflation and low neutral interest rates have in turn pushed central banks to keep policy rates, such as our official cash rate ( ocr ), low, in order to meet their objectives. 2 see