In any case, economists have good arguments to demonstrate, for instance, that subject to the turmoil of an international financial crisis, nations outside the euro, like the UK, Denmark or Norway did worse than the average euro area and many of its members in terms of GDP growth per aging population, since the beginning of the crisis18. Other studies, which build a counterfactual world by comparing the euro area countries with synchronised non-euro area countries in past periods, indicate that in terms of GDP and productivity growth, all countries (except Greece), did better as part of the euro area than they would have done outside the currency uniom.19 We know nevertheless that times of crisis are not favourable to rational arguments and Goya famously illustrated how the sleep of reason engenders monsters. The same reasoning underlines the renowned Vienna Lecture of May 1935 by the German philosopher Edmund Husserl20 as he characterised the European crisis of that time as “a collapse of rationalism”. In those more ominous times his conclusion was: “The existential crisis of Europe has only two outcomes: either Europe will disappear in becoming ever more distant from its own rational signification, that is its vital sense, and will sink in the hatred of the spirit and in barbarity; or Europe will be reborn from the philosophical spirit as a result of a heroism of reason that will overcome naturalism. … Europe’s greatest danger is weariness.
Compare the worldwide costs for taxpayers stemming from the absence of public intervention to rescue Lehman Brothers, with the zero cost for taxpayers following the US TARP 700 billion dollars injection into US banks in 2008 which have by now been totally repaid by the banks. In other words, financial instability can have a meaningful cost to taxpayers even if it is not visible in the very short term – a notion that all policy makers should keep in mind. The new European legislation does allow, as a last resort, for interventions that can safeguard financial stability in a Member State or in the area as a whole. I trust that this legislation will be applied by the competent authorities with rigour, wisdom and a sense of proportion in the aftermath of our Comprehensive Assessment. BIS central bankers’ speeches  5  SRM as a necessary complement to the SSM My remarks about the SRM – as a mechanism less relevant than the BRRD rules for the severing of the bank-sovereign nexus – do not aim to belittle the crucial importance of the SRM for Banking Union. To begin with, the implementation of the BRRD bail-in rules will be done by the SRM at the European level. The credibility of the SSM as supervisor is also dependent on the existence of a credible mechanism to proceed swiftly, orderly and efficiently in the resolution of banks that have attained the point of non-viability.