I want to pay tribute to Helmut Schmidt, one of the greatest Europeans, who said clearly in Frankfurt in October 2011: “There was a failure to  BIS central bankers’ speeches  1  set the economic rules of the game for the currency union. A powerful authority with responsibility for fiscal and economic policy was not set up.” 1 In that spirit, I speak today as a committed European and a contributor to EMU since its outset, as well as a Member of the ECB Governing Council. Some of the ideas I will elaborate upon were put forward in my February joint paper with Jens Weidmann, even though what I will say today does not necessarily represent his views or those of other colleagues of the ECB or, naturally, those of the French government. While such ideas to enhance economic governance are not all new, their implementation is tricky: this will be the main thrust of my speech. Shifting from ideas to action is urgent if central banking is not to remain the only game in town. For this reason notably, central bankers can legitimately contribute to the debate. Yet, taking action will obviously be a decision for political leaders. This issue has already generated many prominent contributions: for instance Jean-Claude Trichet 2 in 2011 advocated the need for a European finance minister; Mario Draghi 3 called, in early 2015, for a “quantum leap” in European integration and institutional convergence and Ignazio Visco 4, last November, wished parallel and decisive progress on political Union.

Second, the Finance Minister would be responsible for supervising the implementation of policy objectives and institutional discipline, using adequate instruments to provide symmetric incentives. Negative incentives would of course include the effective implementation of existing sanction mechanisms. They could be broadened in contractual procedures, already put forward in the 2013 Franco-German contribution on EMU, or in Chancellor Merkel’s 9 “binding reform contracts” proposal, and including positive incentives. One of them would be the access to a euro area ”Convergence Fund”, through which Member States could benefit from common funding, once they have established a track record and convincingly avoided moral hazard. In addition conditioning the participation in economic governance on compliant implementation could provide strong incentives. Third, the Finance Minister would be responsible for implementing centralised crisis management. The specific features of the ESM set-up shed light on inherent euro area limitations, as Member States decided solidarity would not be part of the usual governance system. As a result, the ESM is grounded in an intergovernmental treaty. A Finance Minister for the euro area would naturally be in charge of overseeing ESM operations. Crisis management methods themselves could surely better integrate debt sustainability, liquidity support, and financial stability, some weak points recently underlined by the IMF. Last, while moving towards further integration, the Minister could be given the authority for managing a Euro area Convergence Fund, evolving towards a Euro budget. We are touching here on the issue of a common fiscal capacity, promoted recently by Pier Carlo Padoan or Benoît Coeuré.