Europe has comprehensively responded to this lesson from the financial crisis and has created the appropriate legal and institutional preconditions, which must now be made a reality by all EU Member States. As our experience shows, it is not enough to gear regulation and supervision exclusively to the stability of individual financial institutions.
One reason relates to what would happen inside the euro area, the other relates to the outside world. Let us first consider the euro area. Imagine that wages in Germany were pushed up, causing the economy to become less competitive. For the sake of argument, let us assume a wage increase of two percentage points.