to adjust their business models to the environment. banks should not use monetary policy as an excuse not to make the necessary effort to change their business models and become more profitable. the central bank of central banks, the bank for international settlements ( bis ), also warns that central bankers are repeating the mistakes of the start of this century when loose monetary policy contributed to a credit and housing boom which then collapsed and gave rise to the financial crisis. 5 / 6 bis central bankers'speeches it ’ s the bis ’ s duty to issue warnings, and we take its advice seriously. today, we monitor risks in the financial system in much more detail than before the crisis, as shown for example by our biannual financial stability review. second, we now have new tools under european law – particularly macroprudential instruments. and third, banks are much less leveraged today, thanks to the new regulatory constraints. history teaches us that, always and everywhere, asset price bubbles were accompanied by high leverage. that is not the case now, because banks ’ balance sheets are smaller. that reduces the amount of risk in the financial system. where we need to be particularly vigilant is with regard to market - based finance, also known as shadow banking. we need to gather the right information and we may need new instruments to make sure that the next big crisis does not come from the shadow banking system. 6 / 6 bis central bankers'speeches

esm ). it would be completely wrong in my view to tweak our government bond purchases to manipulate government bond yields in such and such a country. a current internal analysis by the ecb has concluded that, although political risks are high, macroeconomic risks are relatively low. how does this fit in with your reservations? domestic demand is firming up and our concern is more about the resilience of the euro area economy to exogenous shocks. the lessons of 2016 indeed provide some comfort. the euro area was hit by significant shocks in 2016 : the brexit vote, the us election, the italian referendum. and the economy proved to be resilient. we can therefore be reasonably confident that it will be resilient in 2017 as well. which euro area country are you currently most concerned about? it ’ s not about a particular country. what matters for me is the capacity of euro area governments to take collective action. in a period of important elections, they are concentrating on national issues and risk losing the will and ability to act together. but for the euro area to be strong and stable, governments have to work together. this applies both in the short term, with possible economic shocks ahead, as well as in the long term with the necessary structural reforms and strengthening of economic and monetary union. my concern is that in 2017, because of the elections in several countries, not much will be done to reform countries and to improve the functioning of the monetary union. but monetary policy cannot always remain as supportive as it currently is. reforms are urgently needed to allow euro area economies to stand on their own feet, both at national and at euro area level. isn ’ t the basic problem the fact that in the euro area there are generally very different visions of economic and fiscal policy, not least in germany and france? the various governments have different starting positions, which is natural – even good – because europe is about diversity. combining different perspectives has always made europe stronger. but for this to happen, they should talk with each other instead of talking about each other! there ’ s a need to clarify how the euro area will evolve and what the balance should be between solidarity and national responsibility. as long as the euro area is an unfinished house, the ecb will always be expected to do all the hard work. what is particularly important now? i would like to distinguish between two sets of issues. first, there are deep political discussions which we know will need time – such