Summer of 2012. Money First, then Reforms or Vice Versa "Mommy. Why'd all the German guys go on vacation?" What drama! EURIBOR, LIBOR Barclays, HSBC, RBS, Citi, DB, JPM bottom-feeding "scandals". The stress tests. IMF:1 TRILLION EUROS. Sean Quinn Jr's wedding gifts! Insolvency across the globe, still. De Guindos vs Almunia. The FROB. IMF:1 TRILLION EUROS. "France seeks 120 billion EU package, euro bonds later" Samaras vs Huey Tsipras. EFSM, EFSF vs  ReCAP Terror -Or every vulture bids. TSCG Art. 136. IMF:1 TRILLION EUROS. "German FinMin Denies Rumors Of ECB Bond Buying". Birth of the *xit Calls! "Polish Zloty, Bonds Retreat as June Current-Account Gap Widens"...

just setting the scene of battle 26 July 2012,  Global Investment Conference, London, UK.

Then in the banking union or financial markets union, we will have one supervisor for the whole euro area. And to show that there is full determination to move ahead and these are not just empty words, the European Commission will present a proposal for the supervisor in early September. So in a month. And I think I can say that works are quite advanced in this direction.

So more Europe, but also the various firewalls have been given attention and now they are ready to work much better than in the past.

The second message is that there is more progress than it has been acknowledged.

But the third point I want to make is in a sense more political.

When people talk about the fragility of the euro and the increasing fragility of the euro, and perhaps the crisis of the euro, very often non-euro area member states or leaders, underestimate the amount of political capital that is being invested in the euro.

And so we view this, and I do not think we are unbiased observers, we think the euro is irreversible. And it's not an empty word now, because I preceded saying exactly what actions have been made, are being made to make it irreversible.

But there is another message I want to tell you.

Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.

There are some short-term challenges, to say the least. The short-term challenges in our view relate mostly to the financial fragmentation that has taken place in the euro area. Investors retreated within their national boundaries. The interbank market is not functioning. It is only functioning very little within each country by the way, but it is certainly not functioning across countries.

And I think the key strategy point here is that if we want to get out of this crisis, we have to repair this financial fragmentation.

There are at least two dimensions to this. The interbank market is not functioning, because for any bank in the world the current liquidity regulations make - to lend to other banks or borrow from other banks - a money losing proposition. So the first reason is that regulation has to be recalibrated completely.

The second point is in a sense a collective action problem: because national supervisors, looking at the crisis, have asked their banks, the banks under their supervision, to withdraw their activities within national boundaries. And they ring fenced liquidity positions so liquidity can't flow, even across the same holding group because the financial sector supervisors are saying "no".

So even though each one of them may be right, collectively they have been wrong. And this situation will have to be overcome of course.

Diversity is the key to economic and political evolution.