##ing adjustment progress in the stressed countries. it is clear to me, however, that the decline in sovereign bond yield spreads has also been supported by central banks ’ actions. the ecb ’ s announcement of conditional but unlimited purchases of sovereign bonds has – unsurprisingly – calmed investors ’ fear of losing money. you may know that i was not in favour of this measure. while sovereign bond purchases are a widely used monetary policy tool, they are not without risks. they bring monetary policy very close to monetary financing of governments, which could undermine the central bank ’ s ability to maintain its mandate of price stability. monetary policy may face the danger of being dragged and driven by fiscal policy, and find it very difficult to free itself. the more so as governments become increasingly accustomed to bond purchases that keep the interest rates low. in this sense, sovereign bond purchases may act like a sweet poison for the governments. the rude awakening may come when the purchases are reduced or stopped altogether. bis central bankers ’ speeches one particular problem with sovereign bond purchases in a monetary union is that they redistribute risks among the taxpayers of different countries. any such decisions, however, should be taken by democratically elected governments and parliaments. the rallying markets are also being sustained by exceptionally easy monetary policy conditions the world over. nevertheless, there is a risk that market valuations may be running ahead of the adjustment processes. the current long - term yields on some european government bonds already appear to have factored in the required adjustment to a large extent. this, however, creates a setback potential. it is therefore all the more important that policymakers ensure that the necessary economic progress is actually achieved. their determination to implement reforms is pivotal. in any case, low interest rates do run the risk of creating incentives to postpone necessary reforms. thus, the current environment necessitates an even stronger political will. there is no question of there being a quick fix to eliminate the causes of the crisis. considering that the risk potential built up over many years, it is obvious that it will also take time to reduce it. 2. how to make emu more resilient the question is : how do we best go about making emu more resilient? as a starting point for the analysis of the crisis, it is helpful to recall the institutional set - up of the european monetary union. when emu was established, monetary policy was centralised while fiscal and economic policies remained in national

can we rely on directives with national leeway in their implementation or do we need to make use of regulations that are directly applicable? as regards actors, there is the question of where we should rely on decentralised application of common rules and where we need institutions at eu level to implement common rules? what functions could be performed, for example, by the european supervisory authorities, whose activities and tasks are currently being reviewed in brussels? as regards geographical scope, it is important that we strive to make the capital markets union a project of the eu28 to reinforce the single financial market as a whole. nevertheless, it is clear that the euro area has a particular interest in increased financial integration to pave the road towards a genuine monetary and economic union. conclusions let me conclude. some may argue that the capital markets union is old wine in new bottles. i disagree. what is old are the problems that we need to overcome. but for that we need new measures that we have not previously been able to implement – either because of a lack of political will or because of an insufficiently clear plan on how to implement them. art. 114 of the tfeu gives a clear mandate for this purpose. the capital markets union is not so much about a couple of high - profile actions but more about a larger series of less visible initiatives. and that is why we need the capital markets union as connector and label. to operate with this term will help to raise awareness, to define overall objectives, to prioritise resources and to ensure consistency of the individual measures. ladies and gentlemen, the overall situation of the european economy makes it abundantly clear that we cannot wait for a miracle to end a period of low growth. we are not out of the danger zone. the patient is still fragile and unfortunately relapses cannot be ruled out. as i have explained, a capital markets union can provide very important impulses for both economic recovery and financial stability. i am aware that some of the proposals are ambitious and cannot be implemented overnight. but the fact that the incoming president of the european commission has already taken up the idea makes me optimistic. the challenge in the coming months will be to create greater political awareness of the enormous importance of this highly technical area for europe ’ s economy. at the same time, i want to point out that a capital markets union cannot be our only area of action. financial policy, fiscal policy and economic policy are all equally important to keep the recovery on track. governance of