Therefore, their actions are focused, in all advanced economies, on making sure that the impact of their decisions is felt in all parts of the  2  BIS central bankers’ speeches  economy. In other words, they aim to ensure that the monetary policy transmission mechanism is working. Let us now turn to fiscal policy. In all advanced countries, and primarily in the US, the fiscal stance is being hotly debated. As we all know since Musgrave has introduced his famous distinction, fiscal policy has three dimensions: stabilization, allocation and distribution. In a post crisis environment, governments are struggling to find the right mix. Today, what constitutes a “growth-friendly” fiscal policy? Discussion has sometimes focused on the stabilization aspect, and more specifically, on one important, but limited feature: the so-called “fiscal multipliers” which are set out to measure the impact of a change in the fiscal balance on GDP. This narrow standpoint focuses on the negative impacts of fiscal consolidation, especially when the output gap is significantly negative, as is now the case. However, we need to take a broader perspective and take into account the effects of fiscal policy on consumer and investment confidence as well as on the efficient allocation of resources. Where could the gains come from? To answer this question, it is important to consider the interactions between the fiscal stance and debt markets.
In the case of Spain, yields decreased by 70 bps, while in Italy, they decreased by 30 bps. This is the first time in three years that a major crisis in one euro area country has not affected others. This sends an important message. The euro area is more robust today than it was a year ago. While challenges remain, the actions taken have increased our resilience to internal and external shocks. Before I move on to other areas of progress, I would like to say a few more words on Cyprus. First, the financial support provided by the euro area countries and the IMF was very substantial, up to EUR 10, 000 for every Cypriot citizen. This should put to rest the claims that the country was unfairly treated and discriminated against. Second, the commitment to protect insured depositors has been maintained in the euro area and, in fact, is strengthened as a result of recent events. Last but not least: Cyprus is a unique case. This was an extreme situation of moral hazard with big depositors looking for abnormal yields in the domestic banking system. And it justified an exceptional treatment. Cyprus is neither a precedent nor a template for future crisis management. It is also important to state that such a banking model has no place in the euro area. And such a situation would not have existed had the banking union been in place.