##en europe ’ s financial integration is also a chance to underline the real but often forgotten successes in the construction of europe, as well as the costs and dangers of incomplete integration. it illustrates, once again, that europe is not only a project that can benefit everyone, but also one that cannot be achieved without the fullhearted and determined commitment of each and everyone of us. 7 / 7 bis central bankers'speeches

already closely integrated on an economic level, and their financial integration should not be left half - finished. however, deeper integration will not happen spontaneously – it requires strong and determined political action. it means completing the banking union, supplementing it with an action plan to develop other financing channels, and creating deeper and more integrated european financial markets. a. why do we need to increase the euro area ’ s financial integration? we tend to talk of the euro, which has just celebrated its 20th anniversary, as an eminently political project. clearly, this is true : the single currency stands as a daily reminder of our shared european identity. as with other “ european successes ” such as the free movement of people, we often forget that its achievement was not a foregone conclusion. but the euro is also an economic necessity : it was born in part from the obvious difficulties that emerged in the 1980s and 1990s in managing a single market with national currencies. indeed economic union called for monetary union. similarly, the 2007 – 2009 financial crisis, followed by the euro area sovereign debt crisis in 2011 – 2012, shed a stark light on the disadvantages of having an economic and monetary union without a banking and financial union. as the crisis unfurled, the gaps in our financial integration led to a fragmentation of financing 4 / 7 bis central bankers'speeches conditions across the euro area, which in turn exacerbated the negative effects of the shock. some countries experienced an abrupt deterioration in both government solvency and bank solvency, triggering a vicious circle linked to their domestic sovereign - bank nexus – that is the overexposure of domestic banks to their own national government ’ s debt. today, progress has been made in resolving the institutional failings at the root of this fragmentation, with increased oversight and better coordination in fiscal policies and a more homogeneous system of financial supervision. however, financial integration remains a pressing challenge for the euro area, and one on which the future prosperity of the european union and its citizens depends. since the crisis, the allocation of savings and investment has remained firmly biased towards domestic markets and vehicles. it is vital that we make progress in this area if we are to channel our savings surplus more effectively towards investment, and in particular towards the financing of european firms, especially the most innovative and dynamic ones whose development will determine our future potential growth. financial integration is also key to ensuring economic and financial stability in the european union as it will enable the private sector to better absorb economic shocks