As Jean Monnet said, humans take important decisions only in a state of need. Which means in a state of crisis. I expect, nevertheless, that the fiscal backstop for the Single Resolution Fund will be decided, and that there will be some kind of long-term promises about a European Deposit Insurance Scheme. There is also an absence of a macroeconomic tool to automatically stabilise the economy. On fiscal policy, we need two things to address this gap. First, we need coordination of national fiscal policies to become stricter and discussed more from the perspective of the euro area as a whole. This is a very important thing that should have already happened. The second thing is a type of macro stabilisation fund, along the lines of a rainy-day fund, like the IMF has proposed. Let’s see what happens. France has proposed something along these lines. There are also proposals on the table from others. That would be one of my priorities for reform. What about the other side of the coin? Germany and others are calling for risk reduction? First, I would say there has been a huge amount of risk reduction already. The periphery countries have undertaken huge adjustments; they’ve gone from big deficits, both in the budget and the external current account, to complying with EU rules.
Back in 2001 the Governing Council of the ECB, on the basis of a proposal coming from Tommaso Padoa-Schioppa, issued a short paper lining up the arguments for having supervision in a central bank. And if you read that paper, you will see that the set of arguments is heavily tilted towards favouring giving supervision to central banks. So it’s a long-standing position.1 There are many advantages, including one that is not mentioned in the paper: supervision is not just about micro-supervision these days; it now has a macro-financial perspective, for which central banks are much better prepared than any other institution to handle. Central banks monitor developments in all segments of the financial system. From reading your most recent speech, I had the impression that you thought austerity went much too far and the effects have been too drastic. Is that right? 3/8  BIS central bankers' speeches  Yes. And the main example of that is of course the case of Greece. No institution, not the Commission, not the ECB, not the IMF, ever thought possible – let alone planned for – a 25% drop in GDP in Greece. The first and second programmes for Greece were designed with a much more optimistic view on the cost of the adjustment. So the adjustment programme was indeed too harsh. And also perhaps too mechanical, because what the programme didn’t foresee was the total collapse of hope and expectations. Then, at the same time, all countries in the euro area were reducing deficits, consolidating.