bolster private risk sharing. well - developed and integrated capital markets lead to more risks being shared privately, they reduce systemic risk and they stimulate diversification of the funding mix of corporates. all this adds to our resilience as an economic and monetary g p y union. in theory, the emu opened the way for the free movement of capital. but in practice, we see that european financing remains too one - sided – firms and households depend too much on banks, and the home bias of both investors and banks is persistent. so we are not using the numbers in our union to decrease risk. cross - border risk sharing remains low. one reason could have to do with cross - border public risk sharing. here, too, i am referring to the past to learn about where to go in the future. because i know of very few historical examples where strong cross - border private risk sharing developed without, or before, a significant degree of cross - border public risk sharing. so to some degree the two are complements rather than substitutes. in other words, the emu needs both. the recent recovery and resilience facility that i already mentioned, is a telling example of such cross - border public risk sharing. the fund was set up to temporarily support public investments in the energy transition and in digital projects all over europe. investments that strengthen the economic growth potential, and thus the capacity of the eu as a whole to absorb shocks – including in countries facing greater financial constraints. the rrf is temporary because continuous large transfers of public funds would make the project vulnerable from a political perspective. however, the mere existence of this successful cross - border public risk sharing, gives hope for the future. because the matter of the fact is that some public goods, like climate, like energy markets, are simply more efficiently arranged at the european level. over the years, the euro area has grown from twelve to nineteen countries – and soon twenty. almost 350 million people live in the emu. as an economist, it just makes a lot of sense to use the strength in our numbers. to use our strength to achieve shared goals. and to do that, we need to share funds … and also risks. i am an economist, but also a realist. so i am well aware of the political hurdles that must be overcome if we are to increase risk sharing. but looking at what we have achieved so far, i might just be, above all, an optimist. thirty years ago

unified economic block has brought much stability. and as a central banker, that sounds like music to my ears. but … indeed, there is a but. at the start of the emu, in 1999, per capita income levels between countries differed significantly. it was expected that the emu would level these differences. it was expected that countries that had catching - up to do would experience faster economic growth. that we would see sustainable economic convergence in europe. and to some extent this happened. but – here it is – it did not happen quite as across the board as was expected. in terms of real gdp per capita, we mainly saw east - west convergence. so between the original twelve countries on the one hand and the seven, soon eight, countries that joined later, on the other hand. so it is no wonder that, despite past crises and the pervasive pessimism in some european corners, a lot of countries are still very eager to join our economic and monetary union. as far as north - south convergence goes, the first decade of the euro demonstrated the expected economic convergence within the original group of member states. but much of that convergence proved unsustainable and disappeared again after the global financial crisis. in 2010, the emu even suffered a crisis that threatened the very existence of the euro. this taught us that it is much harder to achieve convergence that goes beyond the initial convergence that comes with the entry to the euro area. this further convergence will only be possible when we address a number of design flaws in the euro area ’ s construction. design flaws that the signatories to the treaty did not expect nor foresee. as you will remember, the way out of the 2010 eurocrisis consisted of acute, collective help for individual countries and banks – but also the creation of several european institutions to increase the emu ’ s resilience. we now have common supervision of major financial institutions, a single resolution fund for failing banks, and the european stability mechanism to help when sovereign nations get in trouble. and more recently, we also set up a recovery and resilience facility to collectively and effectively tackle the economic outfall of the pandemic. so now that the emu has proven itself to be an adaptive project, where do we go from here? this is, of course, mainly a political question. and while the eurocrisis was an impetus for improvement, for making progress, we currently find the emu too often at a