I will always remember a long discussion we had in 1991, when I remember having the impression that we had convinced each other that our respective countries really wanted to go through with this – but on two conditions: first, that the institutional structures put in place were flawless; and second, that there was irrefutable evidence of the monetary convergence of the countries invited to merge their currencies.
Both private-sector arrangements (for example, for risk management and funding) and the financial regulatory framework were flawed in design and execution, and these weaknesses were the primary reasons that the financial crisis and its economic effects were so severe. Disasters require urgent action to prevent repetition.