comes to analysing the situation. the discussion on thursday was focused more on whether it was advisable to wait for more data before reacting. but i don ’ t see any substantive differences at this point in time. q : draghi has called on governments to go for fiscal expansion and reforms – it sounded almost like a desperate plea. a : mario draghi ’ s speech at jackson hole in august and the conclusions of the governing council last thursday reflect the seriousness of the situation. the euro area faces risks to its economic growth on such a scale that it ’ s necessary to use all available tools to support the economy. and that means using the instruments on the demand side and the supply side. on the demand side, you have monetary policy. and what the ecb has announced shows that we are committed to taking steps and that we have instruments we are ready to use. you have also fiscal policy, in those countries that have space to expand it. but what matters bis central bankers ’ speeches most are the structural reforms, because without them no supply or demand measure will have an effect. q : is that message aimed at france and italy? a : we are not asking anything from anyone in particular. there is nothing of a give and take here. the ecb is independent and does not enter into this kind of bargaining. we do what we think we have to do and we expect others to do their job. we are just highlighting the conditions for it to be effective. for example, in our view, the countries that want flexibility in applying the stability pact should announce reforms beforehand, because flexibility is useless if it isn ’ t backed by reforms. fiscal policy should be used to support aggregate demand – but within the framework of the stability pact, and that ’ s an important “ but ”. the pact creates confidence. and stretching it or infringing it until it is no longer credible would undermine confidence and, in the end, be counterproductive for growth. in other words, flexibility without damaging the credibility of the rules. q : germany does not seem to share this need for fiscal stimulus. a : our measures will be much more effective if we see structural reforms and a fiscal position appropriate for the euro area. this should be discussed and evaluated at the euro area level. it is normal for the ecb to say this because it monitors the situation across the euro area and is interested in its stability and growth. q : its measures have flooded the market with liquidity.

acknowledges, is that these recommendations are too rarely followed. it would be preferable if countries took them seriously and felt collectively committed. in the case of spain, my personal view is that much remains to be done to support the young people and help find jobs. they are the future. q : would you be in favour of the binding agreements proposed by angela merkel? a : binding agreements are one way of achieving this. however, in my view, it is better to stay within the community framework. it should be a multilateral discussion and not a bilateral one between the commission and each member state. there should be shared sovereignty as far as structural reforms are concerned, because there is a common interest. q : the stress tests are nearing completion. can we expect many failures and are there likely to be any surprises? a : we are checking the results, which will be available in the second half of october, so i cannot make any comments on them at present. q : will the tests be credible after what happened with portugal ’ s banco espirito santo ( bes )? it collapsed despite the fact that the ecb and the rest of the troika had been supervising lisbon for the past three years. a : in the bes case, it appears that information was being kept from the supervisor, which was the banco de portugal and not the ecb. the ecb, the european commission and the imf were in lisbon to analyse financial stability and macroeconomic outcomes. the ecb had neither the instruments nor the mandate to supervise banks, as this was the role of the national supervisor. i do accept, however, that the bes case has served as a reminder that there are risks beneath the surface in the european banking sector, and i am convinced that bis central bankers ’ speeches the single supervisory mechanism will be able to examine the financial health of the institutions in depth. q : could something similar to the bes case happen in other countries? a : this is always a possibility. risks are inherent in banking activities. the only solution is a robust management framework within each bank and on a european level, coupled with instruments such as the single supervisory mechanism or the single resolution mechanism, which will be available in case of crisis. q : some analysts are comparing the situation in the euro area to that in japan. a : i would imagine that they are referring to the situation in japan in the 1990s, rather than to present - day japan. at that time, japan