epicentre of the crisis. but then, what can explain the vast array of opinions on how to resolve the crisis? as i said at the beginning of my speech, the debate runs along the front lines of one of the most well known trade - offs in economics : the trade - off between efficiency and distribution, or, put differently, between sound incentives and burden sharing. such a trade - off informs the debate at the national level. for example, labour market reforms in the countries at the bis central bankers ’ speeches periphery would lower barriers to entry and hence promote employment, but incumbent employees are taking issue with such reforms because they fear downward pressures on wages or a greater risk of losing their jobs. and the trade - off informs the debate at the european level. on the one hand, there is the desire to strengthen incentives and controls in order to contain risks. on the other hand, there is the desire to share the economic, social and political burdens through mutualising risks. such a tug - of - war between sound incentives and greater burden - sharing occurred in the debate on the construction of the rescue mechanisms, in the debate on introducing eurobonds, in the debate on a true fiscal union, and now it takes place in the debate on a possible banking union. the bundesbank position in these debates has been clear and consistent. sound incentives are indispensable for countering the biases inherent in the euro area ’ s architecture. some burden sharing is necessary, and it is implemented via the rescue mechanisms that grant financial assistance. but if burdens are shared in a manner that distorts incentives even further, no lasting resolution of the crisis will be possible. studies by the bundesbank have shown that, in the euro area, which may be interpreted as a particularly credible variant of fixed exchange rate regimes, usual adjustment mechanisms are less immediate and less harsh than in other exchange rate regimes. through the convergence of short - term interest rates and the nearly unlimited provision of liquidity, the common monetary policy smoothes an otherwise more abrupt adjustment process, which would entail significant costs to the financial system and the real economy. but insofar as normal adjustment forces are suspended, sound incentives need to be put in place to bring about lasting gains in competitiveness and productivity. and given the dimension of existing inefficiencies, the current crisis of confidence and past experience of implementation lag and drag, there is no compelling argument for delaying the necessary adjustments while putting

##connection, retailers will no longer have to deploy multiple card - accepting devices, thereby simplifying operations and minimizing costs. ultimately, millions of filipinos will enjoy the convenience, efficiency and lower costs of transactions from your pos interconnection. we at the bangko sentral also welcome this initiative because it presents enormous potential for creating a truly inclusive financial system where strong and vibrant institutions provide efficient financial services to more people including the underbanked and those who remain unbanked or unserved by our financial system. crucial in developing this system is the creation of a network of access points where customers can conduct their transactions through a multi - channel approach for customer interface. this is where an interconnected pos system can play an important role. since pos terminals entail relatively minimal investment, are easier to deploy and are less costly to maintain, it is likely that more and more financial institutions will be inclined to adopt this technology as a channel for their services. the growth in electronic or e - money business is another area that may fortify the role of pos systems further. bangko sentral ’ s circular 649 which set the regulatory framework for e - money and e - money issuers promotes innovations in fund transfer mechanisms and paves the way for a competitive growth in the industry. under this framework, authorized e - money issuers can build a network of cash in / cash out agents that can serve as gateway for the previously unbanked to access financial services. financial institutions can create linkages and leverage this vast network of agents to deliver financial services to a broader market using the e - money platform facilitated by either a mobile phone or a pos terminal. we have seen promising results so far. i understand that the next phase of development for the system is to allow fund transfers, another welcome innovation. as of march 2010, for instance, we have monitored 7. 4 million e - money transactions valued at roughly 11. 3 billion pesos using atm and pos channels. once this pos network interconnection is fully developed, therefore, it will provide even more efficient and costeffective ways to serve the many bankable yet unbanked filipinos. nevertheless, it is prudent to remember that while technology presents us with many opportunities, we must also remain vigilant of its attendant challenges and risks. system downtimes, breach of consumer information confidentiality, unclear charges and fees are among the issues that can