create their own challenges. but, what is meant by the idea of resilience? a resilient financial system has the resources and flexibility to respond to a range of shocks of different sorts. in doing so, it will support stronger growth over the long - run, helping the economy to bounce back and reducing long - term economic scarring caused by the shock. in other words, shocks will be easier to absorb and manage if the fundamentals are sound beforehand. there is an important choice to be made on where to set the degree of resilience, in other words where in the bad tail of the distribution of outcomes. the answer depends on the objective, in this case the public policy objective, and in our work this is one of the key innovations of macro - prudential policy over the last decade. it is not just to prevent the failure of institutions, but rather to ensure for banks that at the chosen level of resilience they can support lending to the economy, to firms and households. of course, there are points in the tail of the distribution beyond the chosen point and it is for those that we have resolution tools. there is a gross cost to resilience, for banks the cost of increased capital 1 / 3 bis central bankers'speeches and liquidity buffers. but that cost should be suitably offset by the benefits, to the economy and to firms themselves. setting the chosen point of resilience must of course be consistent with the cost - benefit case1. putting this notion of resilience into practice in the world of financial stability has been the work of the post global financial crisis years, and will never be done in the sense that we must allow for and respond to innovation. there are two central planks to this work : first, to provide a strong counter - cyclical capacity. this means that banks are able to lend through severe economic downturns, insurers can maintain underwriting capacity in the face of a wide range of severe shocks, and financial markets are able to function, as they adjust to shocks, including the infrastructures in markets that are at the heart of the financial system in the post - crisis reforms, notably clearing houses. much of that functioning also relies on the second plank of resilience, namely structural measures which are not designed to vary in a counter - cyclical manner, but instead apply equally at all times. for banks, this means minimum capital and leverage ratios on top of which sit buffer

years before entry into the euro. to support this process, it is urgent to improve euro area growth rates, which are projected to remain low for a number of years. this can be done by unlocking the many rigidities that still exist in euro area product and labour markets. this process of debt stabilisation is already well underway. the imf projects that the euro area will be almost in primary balance this year, with an average debt level just over 90 % of gdp. in terms of fiscal consolidation, this puts the euro area significantly ahead of some other advanced economies. bis central bankers ’ speeches how to deal with intra - euro area competitiveness imbalances? ensuring debt sustainability is to a large degree linked to the second question of today ’ s panel : how to deal with intra - euro area competitiveness imbalances? to some extent, this question is already answered. rebalancing is happening. large competitiveness adjustments are taking place in the so - called periphery. the countries under full eu - imf programmes have seen unit labour costs improve by around 10 % since 2008, relative to the euro area average. current account deficits are on average 8 percentage points of gdp lower than they were then. but to ensure that this competitiveness improvement is structural rather than cyclical, three further elements are crucial. first, continued and determined reform. and this ultimately has to go beyond economic policies and into fundamental issues of governance, like public administration, judiciary and education. second, the completion of europe ’ s single market. it does not serve citizens to protect local monopolies that lead to high prices and low quality. europe has some of the world ’ s most sophisticated and innovative companies, and they should be operating on a european scale. third, stronger economic governance. we have already made some progress here with a new procedure to monitor and correct euro - area imbalances. but we also need to find better ways to incentivise continued structural reform, including through the use of common funds. all these measures are of course relevant for the country most in the media spotlight, greece. a lot has been done by the greek authorities in last two years. the primary deficit has been reduced by more than 8 pp from end - 2009 to end - 2011. labour market reforms are beginning to show positive results. but a lot still remains to be done. the greek authorities have to demonstrate that they can continue to stick to their commitments. we are seeing encouraging signs that the