Their basis will be consistent with the CACs that are common in New York and English laws. Significantly, all those mechanisms associate the IMF and the European Commission “in consultation” with the ECB to avoid relying only on peer pressure between members states and ensure proper conditionality. As you know, the crisis has also led the Eurosytem to embark on a very limited program of bond purchases. It was our judgment that the transmission mechanism of monetary policy was severely impaired in some cases, as local bond markets were close to paralysis. That program has served us well. Monetary impact was instantly and fully sterilized. Where do we stand? Overall, those changes have been favorably received by the markets. Spreads and CDS on most sovereigns are been trending down since January. Nevertheless, the sense of crisis has not yet disappeared. Most recently, Portugal has asked for an IMF / EFSF program. The success of existing programs remains to be demonstrated. The very progressive elaboration of new framework has prevented outside analysts to see the big picture and measure the amplitude of the changes. There is also a more diffuse concern about sustainability, which I would like to discuss. Looking at aggregate numbers, it is very difficult to understand many of the concerns expressed on the euro area. The Euro area is the only major currency zone with its external accounts in balance, and which therefore does not depend on external finance.
Christian Noyer: The Euro area – challenges and responses Speech by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, at a breakfast for the Economic Club, New York, 18 April 2011. *  *  *  It is a great pleasure to be here today. It is also a privilege to address such a distinguished audience. I would like to take this opportunity to present my assessment of the situation in the euro area, particularly with respect to the difficulties we meet on sovereign debt. Three views on the sovereign crisis in Europe Broadly speaking, opinions and views expressed on the euro area by people outside the Eurozone, can be divided into three categories: hostility for, at least very few people, skepticism and support. First, outright hostility. It is unfortunately true that, in some circles, there is a spontaneous and deeply ingrained opposition to European integration. Since the euro is the most accomplished part of the integration project, it is only natural that it crystallizes those oppositions. Somber predictions about the imminent demise of the euro came predominantly from those deeply anti – European commentators. While those views, like all opinions, should be treated with respect, there is no point in trying to refute arguments which, in great part, are irrational and mainly reflect wishful thinking. Second, skepticism. It emanates mainly, but not only, from academic circles.