“ should the functions of monetary policy and banking supervision be separated? ”, oxford economic papers, vol. 47, no. 4, pp. 539 – 560. 15 for a survey on financial stability arrangements pre - crisis see oosterloo, s. and j. de haan ( 2004 ) : “ central banks and financial stability : a survey, journal of financial stability ” volume 1, issue 2, pages 257 – 273. the responsibilities of macroprudential responsibilities across eu countries see esrb follow - up report with overall assessment on “ esrb recommendation on the macro - prudential mandate of national authorities ( esrb / 2011 / 3 ) : www. esrb. europa. eu / pub / pdf / recommendations / 2014 / esrb _ 2014. en. pdf 16 see smets, f. ( 2014 ). “ financial stability and monetary policy : how closely interlinked?, ” international journal of central banking, international journal of central banking, vol. 10 ( 2 ), pages 263 – 300, june. 17 see draghi, m. ( 2017 ) “ the interaction between monetary policy and financial stability in the euro area ” keynote speech at the first conference on financial stability organised by the banco de espana and centro de estudios monetarios y financieros, madrid, 24 may 2017. 18 see padoa - schioppa, t. ( 1999 ) “ emu and banking supervision ” lecture at the london school of economics, financial markets group on 24 february 1999. www. ecb. europa. eu / press / key / date / 1999 / html / sp990224. en. html 19 see article 5 ( 2 ), council regulation ( eu ) no 1024 / 2013 of 15 october 2013 ( ssm regulation ). 7 / 7 bis central bankers'speeches

– for example the development of the supervisory manual, guidelines and general instructions, as well as benefit from the “ healing effect ” that the comprehensive assessment should bring. let me make a third remark : the banking union should be about strengthening the internal market, rather than fragmenting it. both the single currency and the single market are key pillars of growth and prosperity in europe. both should be maintained and enhanced. hence, the banking union should not create new barriers within the internal market. if countries choose not to join, they should not be discriminated against. two safeguards will be crucial in this regard : having a single rulebook that sets the same standards for all, and having a strong and effective european banking authority with a fair representation of the outs. the relationship between banking and fiscal union let me now turn to the relation between banking union and fiscal union. for the fiscal union, finding the balance between cooperation and diversity is difficult. national preferences for taxing and spending are stronger, and the case for elevating certain functions to the european level is more complex. and there can be no taxation without representation, meaning any shift to a more european fiscal policy must be accompanied by the same shift towards european democratic control. so to frame the discussion, i think it is helpful to recall the taxonomy of economic policy functions described by richard musgrave. he distinguished between stabilisation, allocation schoenmaker, d., ( 2011 ). “ the financial trilemma, ” economics letters, vol. 111, pages 57 – 59, april. bis central bankers ’ speeches and distribution. broadly speaking, stabilisation helps smooth the business cycle, allocation ensures that resources are used efficiently and distribution ensures an equitable sharing of income. stabilisation concentrating on stabilisation, there is a long - standing debate in europe about whether monetary union needs a federal budget to support counter - cyclical stabilisation. as you may know, the report by the four presidents on a genuine emu suggested that a small fiscal capacity could be used for this purpose. i do not want to comment on the specifics of this proposal, but there are questions about whether national preferences are sufficiently aligned to permit it. for that reason, we have to think carefully about whether it is essential for the euro area. in particular, we have to consider how having a genuine banking union might change the debate. as you know, stabilisation in europe takes place through national budgets and, in normal circumstances