The European Fiscal Board interestingly proposed relying on a ceiling on the growth rate of primary public expenditure, net of discretionary revenue measures iv. c/ Making headway with a Financing Union for Investment and Innovation. Private risk-sharing mechanisms, which are less frequently considered than public ones, are just as important and effective, as we can see in the US where capital markets play a more important role as a buffer between states than fiscal transfers. Here, solidarity and responsibility are mutually reinforcing. The euro area has an abundant, and rarely mentioned, resource at its disposal: a savings surplus relative to investment, which amounted to EUR 360 billion last year. This resource is currently invested outside the euro area, even though our potential investment needs are substantial. A better allocation of European private savings requires more efficient crossborder financing channels – savings are not always where the investment need arises – and more efficient “transformation”: preferred savings instruments are often short-term and safe, while financing needs are often longer-term and riskier. This requires the combination of a more effective Banking Union and a “Capital Markets Union”, to make a genuine “Financing Union for Investment and Innovation”. European governments all agree in principle; let us now at last walk our talk, as a significant private booster to our collective exit strategy. d/ Keeping in place an accommodative monetary policy, against the backdrop of low inflation – 0.4% in April in the euro area.

On the other hand, future financing needs related to “recovery and repair” should be the natural domain of European financial solidarity. B. Our common instruments : combining solidarity and responsibility I believe that an "effective and collective exit strategy" should combine four cornerstones of the European recovery – : (i) an ambitious “recovery plan” to provide European financial solidarity, (ii) a clarification of fiscal rules ensuring the responsibility of Member States, (iii) a Financing Union for Investment and Innovation fostering “private risk-sharing”, and (iv) an accommodative monetary policy, against the backdrop of low inflation. Page 8 sur 10 a/ Regarding the first cornerstone, an ambitious "recovery plan", the discussion so far has focused on its amount – it should be above EUR 1 trillion which is roughly the expected loss of euro area GDP this year – or on its structure: should it take the form of loans or grants? Let me answer clearly: it should combine both. Hence, as agreed by the European Council on 23 April, it will be crucial to combine the recovery fund with the next multiannual financial framework – which should be increased. But let us now discuss the content of the fund. First, it should target investments that generate additional potential growth. Second, it should include a "European value added", with positive cross-border spillover effects. Climate change, digital technologies, research and development are good candidates if we know how to be selective. “Technical” institutions such as the European Investment Bank (EIB) could be entrusted, and possibly “pari-passu” with private money.