 Climans, thank you so much for this gracious introduction. Thank you all for being here. Thank you to the IFO Institute for inviting me. Since you mentioned my academic past, and since this is one of the great universities of Europe, and it's always wonderful to escape the political trail in order to recoil into the bosom of a welcoming academic institution, let me tell you the one thing that I regret having made the shift into political life. Which, as you said, it was completely accidental. Had Greece not sank into insolvency, I would still be writing obscure texts for 20 people around the world that read them. The one thing I miss is that up until 2010, 11, when the crisis began, I used to pride myself for never having had any fans, followers, or enemies. Because in academia, we gather around the table, we put forward working hypotheses, theorems, proposals. The, our colleagues try to shoot us down because this is how, through adversarial debates, one clarifies one's own thoughts. The idea of having people that love everything you've said before you've said it, or hate everything you've said before you say it, that is my personal nightmare since the beginning of the crisis. This is the one thing I wish was different in my life. Now, title. When this title was announced, many of my critics were puzzled, having portrayed me for years as a Greek lefty politician who, as a Greek finance minister, would go to Brussels, to Berlin, to Frankfurt, cap in hand, demanding more money from Germany and from other European countries, it was impossible for them to understand how I could be the same person who came up with this title. Now, the puzzle, of course, disappears if anybody took the time to look carefully at what I've been saying since 2010. Let me give you an example. It was 2013, I believe it, 2013, 24th of July, when I published an article in Handel's Blood, your own Handel's Blood. Under the title, Europe needs a hegemonic Germany. Now, in that article, I had all, once more, just like today, puzzled many people. A Greek demanding a hegemonic Germany. But the point of that article was a criticism that the German government has been spending too much money in saving the eurozone, not too little money. The criticism was that it was being spent inefficiently and in a manner that, on the one hand, continued to the pretence that the rules could be respected for a while longer, at the expense of deepening the insolvencies that those monies were trying to hide. In that article, in Handel's Blood, I added that Europe needs a robust Germany, an energized Germany, a Germany that leads the way and uses its money smartly and wisely, a Germany that helps create the European institutions that allow all of us Europeans, not just the Germans, to live in a commonwealth where we contribute and from which we gain. Now, before I go into the nitty gritty of my talk, let me give you the gist of the argument. Let's move just for an instant across the Atlantic to the United States of America, not Trump's United States of America, the concept of the United States of America. The state of New York is a very rich economy. The state of California is a rich economy. But think crisis 2008. The state of New York could not save the United States from that crisis, could not pay for that crisis. The state of California could not pay for that crisis, it could not afford to do it and it should not try to do it. That gives you, if you want a flair of what I'm going to be saying. But now, let me also go a little bit further back. In 2015, while I was minister, since Clemens mentioned my short, but rather intense stint as Greece's finance minister, as minister in March 2015, I wrote in an American newspaper the following and I'm quoting because I think it will allow you to gain a sense of my approach to things. Okay, this is verbatim, March 2015, while I was minister. The fact is that Greece had no right to borrow from German or any other European taxpayers at the time when its public debt was unsustainable. I meant 2010, 2012. Before Greece took any new loans, it should have initiated debt restructuring and undergone a partial default on debt owed to private sector creditors. But this radical argument was largely ignored at the time. Similarly, European citizens should have demanded that their governments refuse even to consider transferring private losses to them. But they failed to do so and the transfer was affected soon after. The result was that the largest taxpayer-backed loan in history provided to Greece on the condition that Greece pursues such strict austerity that its citizens have lost one quarter of their income, making it impossible to repay private or public debts. The ensuing and ongoing humanitarian crisis has been tragic and immocity amongst Europeans is at an all-time high, with Greeks and Germans in particular having descended to the point of moral grandstanding, mutual finger-pointing, and open antagonism. This toxic blame game benefits only Europe's enemies. This is something I wrote in March 2015. The toxic blame only benefits Europe's enemies. As we watch the scenes of Donald Trump thrashing the world order in the G7, I think those words have a certain resonance. A personal note, if you permit me. For me, nothing hurt more in 2015 than being portrayed as an anti-Europeanist Greek minister, arguing that Germany must pay more for Greece and for Europe. In fact, the reason I resigned the ministry, as Clement said, in July 2015, is very simple. I was never going to sign a loan agreement contract that was lending Greece another 85 billion euros when it was crystal clear, and it was crystal clear to the creditors as well, that this money could not and would not be repaid and that it was being extended to the Greek state under conditions that would prevent the Greek society and economy from growing to an extent that it would be able to repay those loans. When you are bankrupt, you have a moral and political duty not to borrow more money until the insolvency is overcome. That's the story of 2015. Today, I painfully observe the realization of those fears. The same playbook is being utilized and implemented throughout Europe, Italy, for instance. Italy today has fallen to the forces of xenophobia and europhobia that secretly or not so secretly welcome the European Union's breakup, at least the euro's breakup. How did that happen? Ladies and gentlemen, I submit to you that it happened because the failed policies first tried in Greece were also implemented in Italy. Just like Greece, Italy had been ruled for decades by a corrupt oligarchy enriching itself from EU transfers and relying on a kind of what I call establishment populism, an establishment populism that traded on the impossible promise that if everybody in countries like Italy and Greece pretended that the rules of Maastricht of the European Union of the fiscal compact later were being adhered to, everybody would be better off. For me, that was a kind of populism, the establishment's populism. Why? Because the rules in question could not be adhered to even if those governments tried to implement them. I shall explain this a little bit later because this is a theorem, it has to be proven. It is not something that is immediately obvious, but that will be my argument. Now, when this promise of the establishment populist was proven false and the doom loop of bankrupt states, the bankrupt Italian state, and the bankrupt zombie banks of Italy, caused per capita income in Italy to continue shrinking year in, year out until the median voter in the great Italy felt that his or her prospects had disappeared. The electoral voted for a new government representing two opposing anti-establishment populisms, that of the Lega and of the Cinque Stelle movement. The crucial difference, ladies and gentlemen, between this new government and the one that I served in was that the one I served in, we were maybe you disagreed with our policies and our left-wing outlook, but we were committed Europeanists. We did not want to get out of the Europe. I can assure you, Mr. Salvini, dreams of getting out of the Europe. However painful it might be, however much of a nightmare it conjures up for the rest of us, this is an objective. It is not a fear for them. These developments are not the result of bad choices, of human frailty. They are the result of a badly designed monetary union. Germany is simply not rich enough to support this faulty architecture. The European Union cannot, backed by Germany, extend and pretend Italy's 2.6 trillion public debt, as well as the losses of the zombie banks. At the very same time, Italy will continue to stagnate under this faulty architecture until some political event will cause its uncontrolled, very costly breakdown. It is the fate of an unsustainable system not to be sustained. The longer it is sustained by political stealth and by throwing good money after bad, the more catastrophic its collapse will be when it comes. We don't know when it will come, but when it comes it will be uncontrollable and exceedingly painful. So what should we do? What should Germany do? Now, some argue that we need the German treasury and the treasuries of other surplus countries like the Netherlands to support the treasuries of the deficit countries like mine. This is both invisible and undesirable, in the same manner that the treasury of the state of New York could not possibly support the whole edifice of the dollar zone after 2008. There are others who propose what is known as the liquidationist approach. Let public debt default if it must, Italy's graces. Now, why I sympathize with this logic? And I wish we had followed that liquidationist approach in 2010 with a Greek default. It must be said and it must be admitted that the Eurozone architecture was not capable of sustaining this because let's face it, our banking system, the one in Greece, in Italy, but also through their various networks and synergies, all the other banking systems, even Germans, cannot sustain the automatic restructuring of Italian bonds when the banking system uses these very same bonds in, to a very large extent, as collateral for their liquidity transactions and for repo operations. So back to square one then. What should we do? Well, here is a summary of my argument. The current rules, I shall argue, cannot be applied even if we all desperately tried to apply them. If there is an architectural fault here that prevents us from doing it. The second point I will make is that those who seek a fiscal union with a German federal government, footing the bill of other governments are wrong for the reasons I explained. German is not rich enough and should not be in a monetary union, in an economic union, in a political union required to pay for others. Third, those who propose the liquidation is true, are essentially maybe unknowingly fueling the fire that will lead to the burning down of the Eurozone as it is. Fourthly, ultimately, speaking as a Europeanist, the solution would be a proper federation. We did not. Imagine if we federated. We had a proper federal government with a proper federal budget that was elected on a one person, one vote throughout Europe. So I would have the opportunity to vote for a German. You would have an opportunity to vote for a French person. God forbid. That was a joke. And so on and so forth. That would be the ideal solution, except that the moment you start speaking those words, people say, it will never happen. And it won't happen for a reason that a British, quite well-known economist, many of you will remember him, remember Nicholas Calder, the Cambridge economist. Well, Calder had written an article in the New Statesman magazine in 1971. Remember 1971? It was when Bretton Woods collapsed. The Werner report was being put together. There was already talk in Europe about recreating the Bretton Woods system of fixed exchange rates, even a common currency in Europe to ameliorate for the shock waves of the collapse of the American-backed Bretton Woods system. And Calder, in that very prescient article, said the following. By the way, a small aside, Calder was a Europeanist. He was not a Euro-skeptic Brit. He was a pro-European. And as a pro-European, he said, he expressed his anxiety. He said, if Europe makes the mistake of creating a monetary union first, as a precursor to a political union, to a federation, this is going to backfire. And his explanation was, the monetary union lacking the political union and the democratic legitimacy is going to give rise to a financial crisis which will then turn Europeans against one another and therefore render the political union impossible. How right he was. Can you imagine starting a proper conversation today about federating? I would participate, but who else would? Maybe some people in here would. But if we went out there and told the masses, I think that that would be a great gift to the alternative for Deutschland, to Salvini, to Le Pen, and so on and so forth. I'm not against it. I'm quite prepared to do crazy things. But this is where we are now. The next step after monetary union, which is a federation, is now rendered impossible by this crisis, which is continuing to destroy the chances. So where are we then? Well, in this sense, there are two causes of action, ladies and gentlemen, that we must consider. One is the controlled dismantling of the current eurozone or at least the creation of a lot more flexibility within it by means of parallel payment systems and parallel currencies. The other is a simulation of a federation using existing institutions and new policies based on a reinterpretation of the letter and the charter and the treaties. These are the two alternatives that I am going to finish off today with. But let's go to the beginning, because I said the first thing I said, my theorem, was that the current rules can't work. In a symmetrical monetary union, they could work. What is a symmetrical monetary union? It's one in which the differences between countries are differences in productivity and endowments. In such a union, especially if the markets are perfectly competitive and there is no market power and there is no asymmetry in the market power that firms have in one country relative to another, perfectly competitive processes will ensure that trade surpluses and deficits, as well as different productivity growth paths, are auto-corrected through a process of devaluation, internal devaluation, or external devaluation. It makes no difference whether you have a euro or free-floating exchange rates. However, things are very different in an asymmetrical monetary union. In a vastly asymmetrical monetary union, especially like ours in the Eurozone, financial markets are bound to destabilize our economy and cause a crisis that makes impossible the implementation of the rules that were designed for a symmetrical monetary union. Now, before I explain this, let me just define exactly what I mean by an asymmetrical monetary union. It's one which contains two kinds of national economies. National economies that comprise large oligopolistic manufacturing sectors with great economies of scale, as well as network economies and scope economies, with production units operating at excess capacity, thus reflecting their market power and their capacity to deter competition and concentrating much of economic activity on the production of capital goods. Think Germany, think the Netherlands. And national economies where the capital goods sector is atrophic, like Greece, like Portugal, like the south of Italy, where production is much less capital intensive and where economic grants are not due to economies of scale but due to corrupt practices of the oligarchies using rent-seeking in the context of the European Union's recycling mechanisms, as well as restrictive practices, chronic relations between authorities and particular business interests. Does this remind you of anything? That's my country. Now, before I continue, I hope you won't leave this room hurling the same kind of accusations that were held at me after one of my Eurogroup meetings when I was accused of having spoken macroeconomics in the Eurogroup. A truth of geometry. One of the few things we know as economists only because it's an identity, it's not a theorem. That if you take uninvested savings, the difference between savings and investment, and you add it to the budget surplus of a macroeconomy, you end up always, precisely, it's an identity with a current account surplus. So allow me a little bit of geometry since I spoke about the truth of geometry. So if I plot on the horizontal axis uninvested savings of an economy, the difference between savings and investment, and on the vertical axis, the budget surplus, and of course, if it's below zero, it's a budget deficit, take for instance a country which has a combination of sigma, star, uninvested savings, and a small budget deficit of tau star. A country like Germany was when the Eurozone was created. Savings exceeding investment, and a small budget deficit. Now if you take a 45 degree line and put it through this combination of budget surplus and uninvested savings, where that 45 degree line intersects the horizontal axis, you get raw star, and that is your current account surplus. That's the truth of geometry. But then if you take a deficit country, a country that is experiencing a bigger budget deficit, like Greece was, or Italy was, in the year 2000, or for the matter Portugal, and you have savings that are lower than investment, why, because investment funds from the surplus country are being transferred through the banking system to the deficit country, you have a negative sigma value, and then when you take the 45 degree line and you push it through that point, you end up with a raw dashed that gives you the current account deficit of that country. Now this is the, if you want, a pictorial representation of the kind of asymmetrical union that we began with in the year 2000. And if you take that green line, you end up with the overall current account surplus of both countries, it's that thick green line, the difference between sigma star and sigma dashed. So the early days of our European Monitor Union looked something like this. You can see that the green line shows you the overall current account surplus that we had around 2000, 2001, the blue line concerns the position of surplus countries like Germany, Holland, Austria, and so on. This is point S1, bottom right hand side, and the deficit countries were at a point like D1, a much larger budget deficit, and of course excess investment over saving because of the transfer of investment funds from a country like Germany to a country like Greece. Now allow me to explain that a little bit better. When one nation origin is more industrialized than another, when it produces more of the high value added tradeable goods, while the other concentrates on low yield, low value added non-tradeables, this asymmetry that you see is entrenched. A freely moving exchange rate, as that between Japan and Brazil, let's say, helps keep the imbalances in check. But the moment we fix the exchange rate and even more so, turn the drachma or the leader into the Deutschmark, also called the Euro, what happens is the banks of the surplus countries feel a lot more confident to borrow, to lend more of the surplus savings that's sigma in their own countries to the deficit countries. Then this influx of loans of capital from the surplus countries to the deficit countries inflate the imbalances, make them more dangerous automatically without asking voters or parliaments, without even the government of the land taking notice. Now, it is easy to see how it happens. A German trade surplus over Greece generates a transfer of euros to Greece, sorry, from Greece to Germany, by definition. This is precisely what happened during the good times, between 2000 and 2008, 2009. This money increased Germany's money supply, sorry, I'm sorry, I'm wrong here, this increased the money supply in places like Greece and the supply of investment funding, created asset bubbles, a false sense of wealth creation. Interest rates were higher and therefore that attracted magnetized even more funds from the Frankfurt banks. Now, take a country like Ireland and the country like Greece. Ireland is certainly a better run country than Greece in terms of its bureaucracy, corruption, and so on. And if you look at public debt, the public debt in Ireland was much less than Germany's before the crisis, whereas Greece's was already very high. But is there a fundamental difference really between Ireland and Greece in terms of the dynamic that I'm discussing here? Not really. Think of what was happening up until 2008, 2009 in Ireland. Deutsche Bank, Finanzbank, were lending to the Anglo-Irish bank and other such rather idiotic banks in Ireland. They were lending to the developers. The developers had a very cozy relationship with the government that allowed them rezoning of permissions for building new white elephants of blocks of flats and blocks of offices. A bubble was created in Ireland, then it blew up under the threat from the European Central Bank. The Irish government took all these losses away from the private sector and dumped them on the public's books. In Greece, was it that different? During the good times, it was a Greek state that was borrowing money from Deutsche Bank, giving it to the developers who were building those highways and motorways and autobahns that cost three times what they cost here in Germany. And then when the whole thing broke down, the Greek public that goes as a stainable. There is an unstoppable dynamic there that goes beyond human frailties and bad choices. While many... So, next slide. During this period of this tsunami of capital shifting from the surplus to the deficit countries, the surplus countries went from a point like S1 to a point like S1-dashed and the deficit countries from a point like D1 to D1-dashed. What you don't see here is that which good people from IFO have been saying for years, as has the European Central Bank, there's been a loss of competitiveness of the South, of the periphery because wages have been increasing, but that is the other side of the same coin, this coin. When you have this influx of capital into a place like Greece, a place like Ireland, that creates bubbles in real estate, in wages, in labor markets, which at some point burst. Now, when a catastrophic event takes place, it doesn't matter what its causes are, like Lehman Brothers, for instance, crashing and the European banks finding overnight themselves in the clasps of insolvency because they had bet on the toxic derivatives that the Americans had produced in droves. Doesn't matter what it is, maybe it was Dubai, the implosion of the public debt market in Dubai. Something happens and suddenly the flow of loans from the surplus countries to the deficit countries stops. And at that point, the deficit countries shift from the bottom left-hand side of this diagram to the bottom right-hand side of this diagram. Why? Because there's no more investment funding flowing from the surplus to the deficit countries and you move from a point like D1 to D2. The budget deficits, of course, increase because you have a financial crisis, you have a recession, like we had in 2008, 2009, 2010. Can you see what is happening to the current account surplus of the whole region, the green line? It is actually increasing. We are pushing ourselves to replace loss demand domestically within Europe as a whole by means of net exports. And then comes the bailouts, beginning with Greece, moving to Ireland, Portugal, Spain, and then the hidden one of Italy and to some extent France, but that's another discussion. And the fiscal compact is what? It's the contract that Mrs Merkel wants to impose upon the rest of the Eurozone in exchange for these bailouts. But what is exactly the intention? The intention is that all our countries should move to a budget that is balanced to the horizontal line. So if we start at the point D2, where we find ourselves in at around 2011, let's say, we should go to a point like D3 and the surplus countries from S2 to go to a place like S3. But notice what that does. That increases the current account surplus of the whole region. You can see at the very top, the green line, depicting the overall current account surplus. Do you know why Mr Trump feels so powerful against Europe because of that green line? Because Mr Trump doesn't understand many things, but he understands a few things well. The one thing he understands is that he cannot lose a trade war with somebody that has a very large current account surplus with him. That's a little aside. Now, just to lighten up the atmosphere a bit, remember that I had the image of the bad boy of the Eurogroup or the recalcitrant who used to say no to the smart adults in the room. Can I share with you something that I said no to? And tell me how silly it was to say no. There was a moment when the Greek state owed the bankrupt Greek government had to repay 5 billion to the European Central Bank. Don't ask why. We had to repay it. It was due to the silly mistake by Jean-Claude Richet to purchase those Greek bonds in 2010, which led to Alex Weber's resignation. He was right. It was a very silly thing to do. It didn't help Greece. All that it did was to make sure that all this money, that all these bonds had to be repaid by Greece after they were haircut by 90% at 100% of their value. Anyway, so I had to pay 5 billion to the European Central Bank. I didn't have 5 euros, not 5 billion euros, to give to the ECB, and they knew it. At the same time, there was money coming to Greece, owed to Greece, from the profits of those ECB transactions. But because we were at loggerheads with the creditors, all disbursements were interrupted. MEPH was meant to disperse to us so that we repaid the ECB was on hold. So I said to them, OK, while we are negotiating until we reach an agreement, let's simply have a moratorium. You are not dispersing to us. We're not repaying to you. Let's give ourselves two or three months, and then we can work out exactly how it will work out. They said, no, you have to pay now. I said, well, you can shoot me. You can kill me. I don't have it. Even if I take every pensioner and sell him or her as a slave in the Middle East, I won't make 5 billion to give you. So they said, but we have to respect the rules. I said, OK, how do we do that? I said, well, look, the ECB owes me 5 billion from all those profits from the past. Actually, it was three and a half plus another one and a half that, anyway, there was some money owed. I said, well, why don't you pay yourselves? No, no, that's against the rules. Can't be done. So it's OK. So you give me a plan, a suggestion, for respecting the rules. And here is what they came back with. This is verbatim, ladies and gentlemen. OK, he said, minister, you've got to ask the Greek banks, the bankrupt banks, to issue IOUs worth 7 billion with a face value of 7 billion. But I said, yeah, but I mean, I can write on a piece of paper that this is worth 7 billion. It doesn't make it worth 7 billion. He said, oh, that's OK, because then they will bring them to you, to those IOUs to you. And you will guarantee them. I said, yeah, but I am bankrupt. How can one bankrupt entity guarantee the 7 billion IOUs of another bankrupt entity? Don't worry, don't worry. Because then they will take those IOUs that you have guaranteed to the central bank of Greece, which is going to get the OK from Frankfurt to lend 5 billion using the 7 billion IOUs guaranteed by the Greek state as collateral. And then what you are going to do is you are going to issue your own IOUs, Treasury bills of the Greek state worth 5 billion. You will sell it to the Greek bankers for the 5 billions that they will have borrowed from the ECB, and thus you repay the ECB. Ladies and gentlemen, have you ever heard of the term Ponzi scheme? If this is not a Ponzi scheme, I do not know what is. I'm giving you an indication of that which I meant by throwing good money after bad. You see, after this cycle is completed, the Greek state owes more. Because there is interest to be paid in every step of the transaction. And who is going to foot that bill? Germany again. Well, my point, and this is the title of my book, is you cannot keep doing this to Germany and you cannot keep doing this to Greece. This is simply, no, allow me to put it differently. We have many differences with our American friends, don't we? Not just now. This is not the first time. Let me remind you that the Americans have a penchant for being rude and nasty towards Europeans, while at the same time being kind and protecting us and all that. Can I remind you by going back to 1971 of a fantastic expression by John Connolly, the then Treasury Secretary of Richard Nixon, who came to Europe after he announced your exit. That's my term, your exit. The jettisoning of Europe from the dollar zone. That's what the end of Bretton Woods was. He said, the dollar is our currency, but it is your problem. But what you probably don't know, and I have this on good authority, from an eyewitness who was in the room with a batter, when he was convincing Richard Nixon that this is what they should do, jettison Europe from the dollar zone. Do you know what he said to Richard Nixon? This is now well documented. He said, Mr. President, my philosophy is that the Europeans and foreigners in general are out there to screw us, and we have to screw them first. So Trump is not the first one to treat us in the way he has. But at least we have to recognize in the Americans a kind of brutal pragmatism that Europe lacks. When the bottom fell out of the financial markets in 2008, what did the Americans do? They gathered around the table, Ben Bernanke, Tim Geithner, Hank Paulson, you know, President Bush. Well, I don't think that helped a lot, but anyway, you know what I mean? All the JPMorgan people, the Goldman Sachs people, they go together and they ask themselves the pertinent question. What must we do to stop this crisis from destroying us? That is the question. And they gave an answer. Now, I may be critical of the answer they gave, but they ask the right question. What did we here in Europe do? We gathered around a much bigger table because, of course, there are 27 of us, you know, with lots of advice. And what question did we ask? How can we pretend that the rules still hold? Ladies and gentlemen, allow me, well, this is how. Allow me to put forward the suggestion that if this is the question you ask, the answer you give is not going to be therapeutic. So to begin wrapping up, what is the alternative to this? It is not liquidationism. It is not federation. Simply put, we have two stark options. We have a difficult dilemma. One is to be honest to each other, to admit that the Eurozone was a mistake, and to find the most the least costly way of moving away from it. There are a variety of ways of doing this. The most obvious way would be for Germany to leave the Eurozone, together with other surplus countries. In other words, to realize the dream of the Buddhist bank. The Buddhist bank never wanted Greece, Portugal, even Italy to be in the same currency area. It had to accept it under a lot of political pressure in the context of German unification. I'm not criticizing, I'm simply describing. But there is a very strong sense amongst many of the economists and the functionaries in the Buddhist bank, and in the financial sector more generally in Germany, that it was a mistake. It would be far better to have a surplus country Euro north of the Alps and east of the Rhine. And let's face it, if Germany leaves the Euro, it leaves from a position of strength, and it will not be crushed by it, the problem it will have will be a tsunami of capital that floods into Frankfurt. But there are ways of limiting this. I'm not proposing this. What I'm saying is that this is an honest choice. There are other ways of loosening up the Eurozone. For instance, when I was in the ministry, I was planning, and I was very close to implementing, but in the end I resigned because we disagreed with my prime minister on a number of things, including the implementation of the system. I was planning what I called a parallel payment system. The idea was this. The Greek state had huge ideas to the private sector. We owed money to privateers, to companies, to individuals, simply because of the liquidity squeeze. So if you were a pharmaceutical company that had sold drugs to the Greek health service, you had to wait for two years to get your money back. Still, this is happening to this day. So the idea was this. Using the web site, the web interface of the tax office, to attach to each tax file number, a box, an account, and to say to that company or that individual, look, you can wait for two years, you know I can't give it to you now, but alternatively, I can type that sum that I owe you in this box, and I can provide you with a pin number. And then you can transfer any amount of that, any portion of that, one million euros, let's say that I owe you, to any other tax file number in Greece. So if you owe money to another supplier, as one of your suppliers, because I have not paid you, you can transfer some of that money from that account to the account of your supplier, and your supplier can then use that money using his or her pin number to pay their own taxes. So this was effectively a system of multiple consolation of mutual arrears. That's how you begin. The next step is to allow citizens who do not have arrears from the state, the state does not owe them money, to purchase such credit units. Why would they want to do it? Let's say you have a few thousand euros in a bank, earning zero interest, and you know that next year, you're going to pay an arm and a leg in taxes, income tax, VAT, your car registration tax, whatever. Well, suppose we give you the opportunity to transfer the money from your private bank account into this account, effectively lend the state. This is date stamped on the basis of a contract that next year, every euro that you put in there extinguishes 1.1 euros worth of taxes. Effectively, I give you a 10% discount if you prepare your taxes a year in advance, or alternatively, you can think of it as a 10% interest rate concerning tax repayments. So that way, you allow a starved state to borrow directly from its citizens, bypassing the money markets, and at the same time, you give the opportunity to citizens to pay less taxes. But if you think about it, this parallel payment system, especially if it becomes quite liquid, then if need be, if need be, at the touch of a button can become a parallel currency. So, this was not a threat to the euro. It was not an attempt to get out of the euro. It was an attempt to create more fiscal space within the euro, but also to have it as a backup in case there is a need for a euro exit to minimize the cost of a euro exit. Because it wouldn't be difficult to allow this system to develop with applications on smartphones so that you can make payments with credit card-like cards, ID cards, that allow you to use this parallel payment system. And the beauty of this is that if you think about it, it does not allow for capital flight for any of the credit units that you have created because it's already captured within. So, there are ways of loosening up or fragmenting the monetary union if that is what we choose. It is a legitimate choice, given where we are. It is not my recommendation. I do not want to see the fragmentation of the eurozone, but it is something we must consider. What is my recommendation? Well, as I said, ideally, I would like to live in a world where the leaders, Angela Merkel, Manuel Macron, hold a press conference and announce that we're beginning the process of iterating, but that is not going to happen, so let's move on. Allow me to imagine, together with you, an alternative press conference. A press conference that does not involve treaty change. It does not involve federal moves. A press conference which announces changes that can happen today within the existing rules, perhaps with the reinterpretation of the rules. The rules are being reinterpreted every way. You've seen that. And let me cut to the chase and tell you what this press conference, if I had the opportunity to orchestrate, it would sound like. The representatives of our great and good would be the president of the European Council, Mr. Tusk. It would be the president of the European Investment Bank, the president of the European Central Bank, the president of the European Commission, if we must. Mrs. Merkel, Mr. Macron, the great and the good. Leaders of our great institutions and the most important political leaders in Europe. And the announcement would have four parts. First, that's the smallest and least ambitious, but I think it is symbolic. From now on, the profits accumulating within the European Central Bank, which were quite a few billions every year, the proceeds and the profits from QE2, from QE, the quantivising process, from seniorage, from the target two accounts, are used to fund something like the Americans have the food stamps program. In the United States, poor families receive a cheque every week signed by the chairman of the Fed, of the Central Bank, whether they're in Missouri, in the state of New York, or in California. And that allows them to cash it in supermarkets and put food on the table. I can assure you, ladies and gentlemen, that the moment they receive that cheque and it's signed by the chairman of the Fed, that is a legitimising exercise. It makes them feel American. Imagine the scene when such a cheque signed by Mario Draghi arrives on the doorstep of a poor family in Eastern Germany, in Portugal, in Greece. They feel European. That's at the symbolic level, but not insignificant. Second announcement, and by the way, there's nothing against the rules for this. We do with the surplus of the ECB whatever we want. It's a question of the European Union Council or the Eurogroup or whatever. It's straightforward. Second announcement, we have something between two and a half and three trillion euros in the financial system of Europe, which is not being invested in fixed capital. In the technologies, the green technologies, the green energy union, for instance, that this continent needs. What it does, it gets reinvested in paper assets. It is being used in order to buy corporations to buy back their own shares so that their share price goes up so the bonuses of the Board of Directors go up. That creates more inequality, but no high quality jobs. Those who have considerable amounts of money in Europe today do not have a safe asset to invest in. The only safe asset we have, really, is the Bund, the German Bond. But there is a scarcity of them. The German federal government is running a surplus. German institutions by law have to have a large aspect of number of their assets in boons. The European Central Bank has hoarded a whole lot of them. There is a scarcity of the only safe asset we have. There simply aren't enough boons to act as a safe harbor for investors. Imagine now, therefore, the second announcement in the press conference of my dreams. The European Investment Bank has been given the green light by the European Union Council to issue bonds worth 500 billion euros every year for five years. And the European Central Bank, Mario Draghi, is standing there, sitting there next to the President of the European Investment Bank and announces that the ECB will be ready to step in the secondary markets in case the yields of the AIB bonds start getting higher. Just that announcement will mean that he will never have to do it. And at the same time, we announce a pan-European network of green transition works, of constructing the Green Energy Union, funding it using this money in a manner that we can decide how it can be. It doesn't have to be through the Commission. It can be through the European Investment Bank. We can do that, which the Americans did in Europe in the 1950s with the then organization of European Economic Cooperation, which then became the OECD. Only this time, it will be our own resources that we managed to soak up from a financial sector that today is being crushed by the excess supply of investment funding which is pushing interest rates in Germany down, making the Swabian housewife turn against Angela Merkel and in favor of the IFD. By soaking up this liquidity using the AIB bonds with the ECB support, you achieve, at the same time, an increase in the interest rates that pension funds in Germany can enjoy and therefore the reversal of the process of depleting the pension funds of the average German person who does not have enough money to play in the big game of the stock exchange. And at the same time, you create a fund, a fighting fund for creating the Green Energy Union that we need for the environment to create good jobs, to push forward, for instance, the replacement of digital technology with electric technology, something that we're not very good at in this country, on this continent, and at the same time, decoupling ourselves from Gazprom and Vladimir Putin. Third announcement, debt, public debt. What do we do with public debt? Well, Frankfurt has always been Frankfurt, German Frankfurt, not ECB Frankfurt, the Buddhist man, has never looked kindly at the bond-buying program of the European Central Bank. And they have a point, I believe. I believe that it was touch and go whether this was legal or not given the charter of the ECB. Mario Draghi had no alternative to do it, but nevertheless, the rules have been completely trampled because they could not be anything but trampled since they could not operate. So here's something we could do. Remember I said we don't have enough safe assets in Europe? Imagine a situation where we take the... This is similar to something the Broegel people suggested some time ago, but not the same. We take the public debt of every member state of the Eurozone, any member state that wants to participate in this scheme, and we split it into two parts, the master compliant part, the part that we were 60% of GDP, which we're allowed to have according to master, and the excess one. Call it the good debt and the bad debt. The bad debt is left to the member states to service in the way that they do. But the good debt, the master compliant part, how about using the European Central Bank as a go between the member state and the markets? So for instance, what the ECB could do is an operation where it issues its own bonds. Don't tell me a central bank issuing its own bonds? Yes, issuing its own bonds. Why not? The central bank of Chile does it. This is not a great innovation. It's been done before. It issues its own bond every time, let's say an Italian bond is to be redeemed. It matures. Half of it is master compliant, half of it is not. The half of it, which is master compliant, is serviced by money that is raised by the ECB on the base of an ECB bond that is sold to some investor in Germany, in China, in Japan, wherever. And at the same time, the Italian government signs a contract with the ECB that it will repay the ECB bond when it matures 10 years from now, but at the minuscule interest rate. And you can also have the ESM provide insurance for the ECB just in case Italy falls completely out of the picture. Now this kind of operation is not illegal. Why? Because nobody writing the charter of the ECB thought of it to make it illegal. This is the kind of creative interpretation of the rules which would be therapeutic unlike this, which is creative but not therapeutic. And finally, bank resolution. We need to break the loop, the doom loop between bankrupt states and bankrupt banks. Italy is never going to get out of its conundrum unless we do this. The suggestion here is very simple. Wolfgang Schäuble absolutely correctly said years ago, 2012, against Mario Monti that we can't have a banking union, 6,000 banks suddenly to become part of one jurisdiction. Well, we've been moving in that direction with supervision but not with resolution and not with deposit insurance. I understand that this is a very difficult topic in Germany. You do not want to have to pay the bill for the banking losses of the zombie banks of the rest of the Eurozone. But how about the following? Let's create a banking union, a jurisdiction, Eurozone jurisdiction that has no banks in it, zero banks. But if, let's say, an Italian or a Greek bank were to go bankrupt, it moves into that jurisdiction. The European Central Bank fires all the directors, the board of directors, replaces them with Japanese or Korean people, no seriously, so that we break this cozy relationship between the local bankers and the governments. They shouldn't even speak the same language as the government of the country. The ESM can provide the capital in the process of recapitalization and then two years later or so, like TAP did in the United States, you sell these banks to the private sector again and the European taxpayer takes his or her money back with interest. And you do this on a case by case basis. Imagine, look, I'm not suggesting this precise wording of the press conference. I'm giving you an example of a kind of speech of hope. Remember the speech of hope in Stuttgart, 1946? That the American State Department secretary made burns at the time, giving hope back to Germany. We need a speech of hope for Europe. This kind of press conference would give that kind of hope, that we can use creatively the existing institutions to move in a direction that stabilizes the crisis, starts giving us again the pleasure of being European, the confidence in proclaiming and Europeanism and creating or actually showing to Europeans and to ourselves what the commonwealth would look like before we sit down to discuss whether we want to federate or not at some point in the future. These are the two choices, disintegrate or simulate a federation. Thank you very much.