will be, however, a coordinated distribution of tasks between the ecb and the national supervisory authorities, depending on the size of banks and national banking systems. with all banks in the euro area under unified supervision, responsibility for deposit guarantee and resolution shall be held at the level where supervisory powers are exercised, i. e. at european level. banking union must therefore cover not only integrated supervision, but also shared deposit guarantee and bank resolution mechanisms. if a single supervisory mechanism is not accompanied by european deposit guarantee and bank resolution mechanisms, it represents banking union under construction and therefore an incomplete separation between sovereign and banking risk. fiscal union lack of fiscal discipline among member states during the pre - crisis period revealed the need to strengthen the european fiscal policy institutional framework. important decisions have already been taken in this field, involving a range of regulations to promote fiscal discipline in member states ( for example the so - called “ six pack ” and “ fiscal compact ” ). however, work for the construction of that pillar is still currently under way. these regulations must be complemented by institutions assuring their effective implementation. indeed, europe needs a qualitative change towards fiscal union. economic union the achievement of a genuine economic union requires the establishment of an institutional framework able to assess, coordinate and monitor member states ’ economic policy measures and reforms. special emphasis should be placed on areas with a potentially higher impact on competitiveness, economic growth and employment, simultaneously promoting social cohesion. member states ’ economic policies and macroeconomic imbalances are an issue of common interest and therefore require a “ win - win ” concerted response. the “ european semester ” and the “ euro - plus pact ” are important improvements in this area. strengthening democratic legitimacy and accountability to move towards more integrated fiscal and economic policies we need to implement mechanisms ensuring democratic legitimacy and accountability in joint decision - making. if this political dimension is ignored, we will not be able to evolve towards greater financial, fiscal and economic integration, for lack of legitimacy and accountability. this political dimension of the integration process must reconcile two sources of concern : the need for a legitimate response vis - a - vis “ the whole ” ; and the need to ensure that all parts, irrespective of their size, are represented and participate in the decision - making process. in particular, the so - called “ community method ” must be revitalised, in tandem with restoring the european commission ’ s central role, by strengthening its effectiveness and legitimacy. bis central bankers ’ speeches this

carlos da silva costa : the importance of strengthening european integration to ensure the success of the portuguese adjustment article by mr carlos da silva costa, governor of the bank of portugal, published in diario economico newspaper, 31 december 2012. * * * the flaws in the architecture of the european economic and monetary union today it is clear that the architecture of the economic and monetary union was flawed and incomplete from the start, which made it unable to ensure economic and financial stability when exposed to abrupt changes in market uncertainty and risk perception. in some cases, these flaws have heightened the difficulties faced by member states, which in turn explains why the contagion effects among euro area economies have surpassed expectations. the flaws in the architecture and institutional framework supporting the establishment of the economic and monetary union necessitate an urgent rethink of this model to ensure that the euro area is stable and resilient both to common and specific exogenous shocks and to risks of inconsistency among the policies of the various economies. this is to ensure that the construction of the euro area is supported by all pillars determining its stability and resilience and that it relies on rules and institutions controlling the mutual interdependence between the stability of the whole and each of its parts. the construction of a new future for europe the flaws in the architecture of the euro area and the lack of appropriate rules and institutions to promote the stability of the whole and its parts explain why the sovereign debt crisis was deeper and more protracted than initially expected. these flaws also explain why resolving this crisis and restoring sustainable and job - creating growth in europe requires measures both at national and european level. in the euro area, these two dimensions complement and determine each other : the stability of the whole does not tolerate a lasting divergence / instability in one of its parts. likewise, the stabilisation of one of its parts depends on the nature of the impulses it receives from the whole. national policies to restore debt sustainability first, the countries that have accumulated significant macroeconomic imbalances in the past and that were faced with market - based funding constraints in the context of the current crisis need to adopt policies to restore public debt sustainability, financial stability and competitiveness, thereby recovering their credibility and confidence. this is the case of portugal. the strategy established in the economic adjustment programme for portugal – which relies on fiscal consolidation, financial stability and structural reforms – is crucial to eliminate the macroeconomic imbalances and structural blockages that have led us