over - priced with markets quickly becoming one - sided as a result of contagion and extreme risk aversion. underlying the crisis is thus a significant fragility of security markets, which calls into question the efficiency of financial markets more generally. bis central bankers ’ speeches from the sub - prime to the sovereign debt crisis at least three aspects of the sub - prime crisis contributed also to the current sovereign debt crisis. first, the sub - prime crisis weakened banks ’ balance sheets, which were still under repair when the sovereign debt crisis came to a head in may 2010. second, the fiscal support given to banking systems and significant spending packages worsened public debts and deficits. third, the lehman bankruptcy left confidence in the robustness of the financial system severely dented. the root cause of the current crisis, however, lies within the shores of the euro area. nonetheless, with the internal and external value of the euro holding up well, this is certainly not a crisis of the euro but a sovereign debt crisis focused on some euro area sovereigns. two things, however, have gone wrong : first, some countries have accumulated debts and deficits, which at a minimum make them vulnerable to self - fulfilling unsustainable dynamics. second, the stability and growth pact was effectively suspended when france and germany escaped sanctions for breaching the debt and deficit criteria in 2003. more generally and at a deeper level, the governance of the economic union, which should complement the monetary union, has been insufficiently articulated since the outset of emu. the standard tool : the official interest rate what has been the role of monetary policy in this context of economic and financial crisis? let ’ s start by first looking at what is often referred to as conventional monetary policy. the standard and most important tool of monetary policy is the official interest rate, in the case of the eurosystem the minimum bid rate in the weekly main refinancing operations. although we characterise this tool as “ standard ”, the financial crisis did require significant and aggressive cuts in interest rates : following the collapse of lehman brothers the ecb lowered, within a period of seven months, the refinancing rate by 325 basis points from 4. 25 % to a historic low of 1 %. the rate was kept at this historically low level until april 2011 when the governing council decided to increase the rate by 25 basis points. this was complemented by another rate increase to the current level of 1. 5 %, which the governing

side ( nearly 40 % and 23. 5 %, respectively ). all data in this section refer to 2005 unless otherwise indicated, as 2006 data are not yet available for all countries. the data source is the imf international financial statistics, which provides comparable data across countries. these data may somewhat differ from other data sources. at the same time, i should also stress that the amount of euro area fdi in emerging market economies rose quickly. between 1999 and 2005, outward fdi from the euro area to the so - called bric group – which includes brazil, russia, india and china – increased markedly. over this period, the stock of outward fdi in the bric group rose from €63 billion to €133 billion ( or by 111 % ). in comparison, the stock of euro area fdi in the united states increased by 55 %, from € 360 billion to €558 billion, during the same period. while the overwhelming share of outward fdi to the bric group was directed to brazil, euro area companies have raised considerably their fdi stocks in russia, china and india in recent years. even more interestingly, the euro area has also become attractive as a destination for fdi from the bric countries : between 1999 and 2005, fdi stocks from the bric group in the euro area tripled, from €4 billion to €12 billion, while still remaining low in comparative terms ( for instance, the figures for us fdi stocks in the euro area rose from €322 billion to €560 billion over the same period ). the brazilian and russian firms account for the bulk of the bric countries ’ fdi surge in the euro area, but chinese and indian fdi has picked up in most recent years, as frequently reported in the media. on the whole, this evidence suggests that the euro area is financially integrated not only with mature economies but increasingly also with the most sizeable emerging economies. concluding remarks ladies and gentlemen, this brings me to the end of my remarks in which i have highlighted some major issues related to the process of european financial integration, a process that should not be seen in isolation but rather as an important contribution to global financial integration. i very much appreciate the transatlantic dialogue on the lessons we can learn from each other. this round table today contributes a great deal to increasing our awareness of these issues. thank you very much for your attention.