Mr. Klaus Regling:

It goes a little bit beyond my report, because I had to draw on the lessons after 2008. Of course we now say that all of those who were involved, including the European Commission and the Eurogroup, and the design of the monetary union when it started in 1998 were incomplete. My institutions, the EFSF and ESM, did not exist. The founding fathers of the euro did not believe that such an institution, which would provide emergency finances when a country loses access to markets, would be needed because they could not imagine that a member of the euro area could lose market access. Also, we could not imagine a crisis of the magnitude we saw in 2008, 2009 and 2010. It was the worst economic crisis in 80 years and was not anticipated. It is one example. There are many others.

The surveillance was too narrow and focused on fiscal policy, which is important, but we did not pay enough attention to other imbalances which became very large, such as divergences in competitiveness. Ireland is a prime example of that. We also had a chart in the report showing that unit labour costs in Ireland increased by 45% more than was justified by productivity gains from 1998 to 2008. This led to the very large current account deficit, not surprisingly. We now have a totally new system of surveillance and monitoring of-----