where it is often thought – and reported – that joining the euro would put national fiscal policies under the control of bureaucrats in brussels or frankfurt. political integration in the euro area is an evolutionary process. the special meeting of the eurogroup, in the composition of heads of state and government, in paris on 12 october last year was a first : it addressed the financial crisis, and in doing so the euro area showed its effectiveness and its capacity for leadership. it is an important precedent, which shows that when needed the euro area can take important decisions and cooperate swiftly. the eurogroup probably won't need to meet regularly in this format – as this would risk overshadowing the finance ministers ’ meetings – but now at least it is an option, a feasible one. let me give you another example of ongoing political integration. the current crisis has shown the need to strengthen prudential supervision and, in particular, its links with central banking. this is a recommendation contained in various documents and reports, in particular that of the financial stability forum ’ s to the g7 ministers and central bank governors. several countries will be moving in this direction. in the us the federal reserve will receive greater responsibilities for macro - prudential supervision. the euro area has a centralised decision - making process for monetary policy but a de - centralised system of supervision. the conclusion is obvious : cooperation between supervisors needs to be much stronger within the euro area. this also implies that the ecb, which conducts the monetary policy for the euro area, should be entrusted with greater supervisory powers, in particular concerning macro - prudential supervision. there should be a broad consensus on such a proposal among euro area members. however, this can be implemented only by activating article 105. 6 of the eu treaty, which requires unanimity of the eu member states. will some noneuro area members oppose this? a final word on political union. a superficial reading of david marsh ’ s book might give the impression that political integration has taken place over the years as a result of some countries dominating others, distrust between political classes of different countries, threats, truces and fights, etc. it ’ s interesting to relate history in this way. but we should never forget that the creation of the euro has been the result of an unprecedented democratic and peaceful process in europe, led over 50 years by leaders who have put the interests of the people of europe ahead of any other objective. the next ten years where does this leave

the us, europe ’ s performance as a whole has stalled since the heyday of post - war reconstruction. ” looking carefully at the data, over the last decade the us has recorded higher average gdp growth than the euro area only because of its higher population growth. gdp per capita has increased at exactly the same pace in the two areas. you might have expected growth to have been stronger in the euro area, as the starting point was lower. but comparing levels is not so easy, and depends very much on the exchange rate used as well as other variables. as for employment growth over the last ten years, it has been stronger in the euro area than in the us, and the rate of unemployment has decreased to a substantially greater extent. of course, the last few months of this decade have been different. i will come back to this issue later. making assessments on the basis of long averages means that adjustments are made to take account of cyclical and temporary shocks. however, this might lead us astray. it would be incorrect to claim that the strong employment results achieved over the last ten years are exclusively due to the euro. the improvement is more likely to stem from the structural reforms implemented in the member states over the years. a third objective of the euro was to move forward the integration of the financial markets. the results in this field are positive, but also uneven, depending on the market segment. integration is more advanced in the areas close to the single monetary policy, but it also depends on the degree of integration of the underlying market infrastructure. the euro area money market, the segment closest to the single monetary policy, reached a stage of “ near perfect ” integration almost immediately after the introduction of the euro. the malfunctioning of recent months is common to all currencies. on the other hand, short - term debt securities ( i. e. commercial paper and certificates of deposit ) have remained much more fragmented. financial integration has been fastest in the government bond market, where yields have converged and are increasingly driven by common factors, although local factors and perceived differences in credit risk continue to play a role. likewise, the corporate bond segment is also more integrated as the various markets have merged into a single, yet diversified euro market. as a result, country - specific factors have become less important in determining corporate bond prices and spreads. cross - border holdings of long - term debt securities of monetary financial institutions grew from about 15 % in 1999 to nearly 40 % in 2007.