Consequently, some solutions can only be applied at the international level. This is why the G20 has grown in significance since 2008. We need to make further progress in international cooperation, in particular to identify the sources of global financial imbalances and reduce them via the “framework for strong, sustainable and balanced growth” and to improve international financial regulation. As regards the latter, we must always bear in mind our twofold objective: enhancing financial stability while ensuring the financing of the economy. I would now like to turn to the situation in the euro area. As you know, in 2011, the sovereign debt crisis in the euro area was particularly ferocious, spilling over to countries with sound economic fundamentals. The first three months of 2012 had shown a few signs of improvement, in particular thanks to the Eurosystem initiatives and positive political impulses: pressure on sovereign debt eased slightly, and bank financing and money markets recovered somewhat. But since April, sovereign debt and banking systems have come under renewed pressure. The two main driving factors behind this deterioration are the fiscal problems and difficulties in the banking sector in Spain – but the plan adopted over the weekend should respond effectively – and, above all, the major political uncertainty in Greece. Therefore, there is a tremendous amount of work to do on a number of fronts if Europe is to find a durable solution to the crisis.
It should have three main powers: –  banking supervision (possibly the same kind of structure as the Eurosystem with one “head” and decentralised implementation);  –  deposit guarantee, with massive firepower, provided that it could collect a tax on every euro area bank and could borrow on the markets with a supranational guarantee;  –  banking resolution (crisis management). BIS central bankers’ speeches  3  Of course, such a leap will require numerous steps and the elimination of a large number of substantial obstacles. But what it requires most is an unfailing political will from all euro area members to progress towards a stronger and more coherent economic and monetary union. After all, the greatest advances in the European project have always come in reaction to crises. And we should remember the prediction of Jean Monnet: “Europe was born out of crises and will be the solution to these crises.”  4  BIS central bankers’ speeches